The Association of Mortgage Intermediaries has launched a scathing attack on the introduction of home information packs, arguing they will be difficult to police and could be an obstacle to professional impartial advice.
The attack comes as part of its response to the Office of the Deputy Prime Minister’s (ODPM) consultation on the introduction of hips, due to be launched in 2007.
Fay Goddard, deputy director general of Ami, says: "In principle, Ami supports the objectives of the home information pack but as the consultation process has progressed, there is increased concern from our members of the unintended consequences that the introduction of Hips may have on both consumers and the mortgage intermediary sector.“
Goddard says hips could lead to a reduction in consumer access to professional advice and that this would be detrimental to consumers while also being the reverse of stated government policy on having wider access to better value financial products and access to advice.
Ami says it is concerned hips could be used in such a way as to restrict access to the full range of mortgage products available to consumers, adding the trade body would like to see safeguards within the rules to prevent hips being used in any anti-competitive way.
Officials have also raised concerns relating to market practice as Ami fears property companies, estate agents and lenders might use hips as a marketing tool for mortgages and associated insurance products targeted at the prospective house purchaser.
While the rule relating to prohibited documents disallows the inclusion within the pack of any documents not required or authorised, Ami says in practice, this will be difficult to police.
"Even if not part of the actual pack, an additional page or two highlighting special offers or deals, presented together with the Hip, is likely to attract attention", it argues.
Ami is calling on the Financial Services Authority (FSA) to confirm its stance - unregulated firms, such as estate agents who are not regulated for the purposes of mortgage advice or arranging, must not breach the regulatory perimeter.
Moreover, Ami says hip providers will be keen to attract the future mortgage and insurance business of home sellers, leading Ami to have concerns marketing of "free hips" could be used as a tool to restrict access to the range of mortgage products and insurance services available if the hip provider does not offer a wide ranging service.
And it says as mortgage intermediaries will be key players in raising awareness of hips they may well be expected to explain their purpose and as well as be asked to advise clients on subjects such as the reliability of a home condition report.
While Ami admits the draft regulation makes clear an accredited home inspector is responsible for the content of the home condition report, the intermediary trade association still has concerns about the liability of intermediaries for any hip-related advice.
James Cotton,mortgage specialist at L&C, says: There is some concern about whether Hips are going to come in on time and there is scepticism about the launch of them as well.
"I would have to agree with Ami's concerns. Hips will put estate agents in a very powerful position and they could well use that to try to get a mortgage sale as well.Many consumers as a result may not get whole of market advice."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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