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The Financial Ombudsman Service will ramp up scrutiny of those brokers who sell investment products to clients who originally came for mortgage advice, Ami has warned its members.

In a letter to its members, Katie Taylor, policy analyst for the Association of Mortgage Intermediaries, said that there was a potential conflict of interest when a broker was wearing one hat as a mortgage adviser and another hat as a tied investment adviser.

She said: "The Fos is likely to look at cases where a client is sold an investment product when they originally came in to get advice on a mortgage.

"In some circumstances, advisers should be considering recommending offset mortgages rather than structured products."

Ms Taylor said that while methods of diversification should be welcomed in a difficult market it is important that members carefully consider their responsibilities towards a client.

A recent poll showed that 41 per cent of advisers were looking to advise clients about savings products in order to supplement their income.

The news comes as the FSA confirms that advisers will not be left vulnerable to claims of mis-selling in the event a product is dual-priced.

The move comes following discussions with Ami and the Association of IFAs. Chris Cummings, joint director general for Ami and Aifa, said this was a positive step, however he urged members to keep their own client-specific records particularly with regard to advice given.

He said: "Our stakes in the ground work will provide an accurate record of recent events, which members can call upon in case of complaints in the years ahead."

CORRECTION:

We would like to correct this report, which stated AMI had urged FOS to turn its attention to mortgage advisers. This is not the case. AMI has issued advice to members to ensure proper procedures are in place if selling structured savings products to clients. There is a potential conflict if advisers sell a product when the consumer was originally seeking advice on an alternative area such as mortgages. While methods of diversification should be welcomed in a difficult market it is important that advisers carefully consider their responsibilities to clients.

Chris Cummings, Director General of AMI, said, “We fully recognise the difficulties advisers face in the current market. We support moves to diversify business practices. We are ourselves going to be running a national series of business diversification workshops to help members rebalance their businesses to weather the current storm. We are working with residential, commercial, and off-shore mortgage lenders on this programme, as well as those involved in equity release, the protection and savings market. There are issues for advisers to consider and AMI is committed to helping them through this process.”