Promoting execution-only is not treating customers fairly
10 Jun 2019
There’s been a lot of talk lately about contradictions in the mortgage market.
One of those appears to be that we have the same regulator that introduced the Mortgage Market Review (MMR) – which placed advice on a pedestal – now seemingly suggesting that many consumers don’t need that advice.
Instead it is focusing much attention on why clients are not always recommended the cheapest mortgage and a desire to change its rules to facilitate more execution-only business.
That seems like a fundamental change in direction and one that, if it makes it through to new rules, will have a big impact on our sector and the lives of advisers.
Bizarrely, at the same time, we have a government which, in two new guides for prospective home buyers and sellers, outlines the work of advisers and how they might be useful.
This is especially so if the individual is self-employed or has some unusual circumstances which might curtail the number of mortgages available to them.
Is there a discrepancy here? Why do we have a regulator seemingly intent on eroding the importance of advice, when it was the one that created an environment where advice was deemed all-important?
How is this TCF?
I read with great interest the comments of Robert Sinclair at FSE Manchester where he talked about the ‘deceitful’ and ‘dangerous’ consultation paper on these advice changes.
These are strong terms, and knowing Robert well, he would have thought long and hard before using them, but they clearly outline the depth of feeling on this matter and how important it is for the industry to push back against the proposed changes.
Is Robert right? Are we effectively seeing a regulator attempting to reverse-engineer the market into a place where execution-only is far more accessible and therefore acceptable, simply because the levels of such business are much higher than it anticipated?
It does seem odd, especially when you read the words of the Financial Conduct Authority (FCA) itself which recognises and accepts that an increased amount of execution-only business is likely to mean that more consumers get unsuitable mortgages.
How can this be right or deemed to be treating consumers fairly?
We must make the case again
Having worked within an environment where advice has not just been prominent but widely accepted as right for the vast majority of clients, it seems that we are going to have to make the case for mortgage advice all over again.
No-one is going to make the case for us.
Our industry has to do this and it has to use all the positive examples of what mortgage advice can deliver to clients.
For instance, I saw a tweet from a broker which highlighted how they’d saved a client over £7,000 in mortgage payments over a 24-month period.
For a regulator seemingly obsessed with price that might fit the bill, but the bigger message cannot just be on cost, it has to include all the protections that come with advice, which clients simply will not get by going execution-only.
Taking it for granted
There are many positives that we in this industry might take for granted, and if we are doing this, then so will our clients and mortgage borrowers in general.
That cannot be allowed to happen – regulatory changes are unlikely to go in our favour this time, but that does not mean advice is not still the best option for the vast majority of people.
It’s perhaps time to put that message forward again because those who might wish to push execution-only options, and cut out the adviser, are about to have those wishes granted.
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