AMI chief executive Robert Sinclair has described the Financial Conduct Authority’s (FCA) consultation paper on mortgage advice and selling standards as “one of the most deceitful documents I’ve seen”.
Speaking at the Financial Services Expo (FSE) Manchester, Sinclair suggested that the FCA’s apparent U-turn to make “execution-only business easier” was “dangerous”. He argued the regulator was now trying to row back on the rules introduced as part of the MMR which were initially intended to “make execution-only difficult… and that lenders had to sign all this off by board committee”.
Sinclair added: “To say now, because they have an unfortunate lapse of corporate memory, that this is not what they meant is untrue. They meant it and there was a good reason for doing it.”
Sinclair suggested that part of the reason for the attempt to make execution-only business easier to write is because it accounts for in excess of 30 per cent of all mortgage business. The AMI executive argued that because the market is in a different place to what has been intended post-MMR, the FCA’s consultation paper is “an attempt to legitimise what has been done as opposed to actually going back and sorting the problem”.
“This advice change is going to be difficult because they want to change affordability as part of this process,” said Sinclair. “They want to make it easier to do execution-only and they want to legitimise it so that lenders can offer a product on execution-only which is cheaper than on an advised rate. I think that is dangerous.”
Sinclair also argued that a focus on price would not help mortgage customers who have more complex needs and where product criteria, such as early repayment charges, were not widely understood.
Sinclair concluded by claiming he will be “fighting quite hard” to make sure that the recommendations in the consultation paper are not implemented, as “when we hit the next crash, as there has to be, all of this will go to hell in a handcart”. However, he expressed concerns that it “will be hard to push back against all of it” without the support of other lender trade bodies.
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