Key actions
Our findings show that over three-quarters of firms in the sample from this sector did not have robust processes in all areas of their business associated with giving advice. This leads to a high risk of unsuitable advice being given.
Key actions for firms
Quality of advisers:
- Ensure mortgage advisers are appropriately qualified. If advisers are not, stop them giving advice to clients with immediate effect and review a sample of business written by these advisers to ensure there is no consumer detriment.
- Review your T&C procedures. Ensure these are appropriate and are being properly used by your firm.
Assessment of customer needs:
- Check the processes you use to assess affordability. If these do not appropriately assess affordability, amend them and consider what action you should take to check whether this has resulted in any consumer detriment, such as a past business review.
Recommendations including research:
- Check the processes you use to make recommendations. Make sure advisers carry out adequate research to support why a particular lender and product was recommended. Check that advisers are able to evidence from the file why the product recommended is the most suitable. If an adviser recommends a switch from an existing lender to a new one, ensure existing products and penalties are properly considered.
Communications with customers:
- Provide customers with Initial Disclosure Documents that accurately reflect the level of service being provided and how the firm will be rewarded.
Management controls:
- Ensure your systems and controls provide you with management information so you can check whether your advisers are giving quality advice and are treating customers fairly. This information should allow you to identify trends in issues arising and their cause. Act on any issues you find. Focus your monitoring on the quality of the advice provided rather than just the completeness of the file.