The FSA's current response to the issue of dual-pricing in the mortgage market fails to recognise the role and value of advice for consumers, according to the Association of Mortgage Intermediaries (AMI).
AMI has also criticised the FSA for not considering the wider ramifications of suggesting mortgage intermediaries should send their clients directly to lenders.
Following a speech by FSA head of mortgage and credit unions Jonathan Fischel at the Mortgage Expo in Manchester, Chris Cummings, director general of AMI, says: “We are very concerned about the content of Mr Fischel's 'Mortgage Update' speech delivered at Mortgage Business Expo.
“In the speech he implied that the FSA were introducing new disclosure requirements solely for independent mortgage intermediaries in the midst of what can only be described as turbulent market conditions. It was left unsaid how tied salespeople would have to respond to Mr Fischel's speech.”
Cummings says the FSA’s suggestion that brokers can inform clients that a direct deal might be more competitive fails to recognise the service provided by a mortgage intermediary.
Cummings says this raises further questions across the financial services industry, such as; “should an IFA tell an investment client they can get a better deal by going direct? Should tied advisers refer to the fact that a customer may get a better product from an independent adviser?”
Cummings says the mortgage market already has rules relating to mandatory disclosure, and the FSA should review these rules if it does not believe they are sufficient.
“The FSA should not choose to announce regulatory changes at a trade show, without first considering the wider ramifications of their announcement. We strongly urge the FSA to reconsider its position,” he says.
AMI says the large number of consumers seeking advice on regulated mortgage business, thought to be over 60%, indicated that consumers value advice.
It says it could be very dangerous for consumers to take such an important financial decision without seeking advice, particularly in these turbulent times, and expose themselves to reduced complaints rights at the Financial Ombudsman Service.
AMI has called on the FSA and lenders themselves to put mortgage borrowers first and says it will continue to work closely with the regulator to resolve the issue.
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