The FSA considered moving to an all-advised mortgage market but says consumers should not be "forced" down the advice route.
In its latest consultation paper on the Mortgage Market Review (MMR), the regulator said it believes it is important to allow consumers the freedom to continue to choose a product for themselves.
The FSA mulled switching to an all-advised market, except for internet sales, because the affordability and 'appropriateness' of a mortgage is assessed on advised sales only.
Today, it proposes a standardised affordability and appropriateness test across all mortgage sales.
"From the consumer's perspective the important outcome is that, so far as possible, they buy a product that is affordable and appropriate for their needs and circumstances.
"However, firms will be able to continue to differentiate themselves by choosing whether to make a personal recommendation."
Meanwhile, as outlined in the earlier MMR discussion paper, the FSA has proposed all individuals that sell mortgages to hold a relevant mortgage qualification at QCF Level 3, ensuring appropriate professional standards across all sales.
Additionally, the FSA has proposed moving away from brokers' current requirement to find a 'most suitable' product for consumers, replacing it with a requirement to act in the 'client's best interests'.
It said, given the number of products that potentially meet a consumer's needs and circumstances, the 'most suitable' test was a diifficult standard to attain and prove.
This consultation paper (CP) is the third following the MMR discussion paper published in October last year. The first two CPs dealt with 'arrears and approved persons' and 'responsible lending'. This paper (READ IT HERE) deals with 'distribution and disclosure'. Consultation for this paper closes 25 February 2011.
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