We have published a Consultation Paper (CP) that proposes changes to the mortgage sales process (CP 10/28 Mortgage Market Review - Distribution and Disclosure).

We are proposing various changes that will affect mortgage sellers (both intermediary and branch based) and the mortgage sales process. Our aim is to ensure that, so far as possible, consumers are adequately protected against inappropriate product choice.

The changes we are proposing include:

Distribution

• Removing any specific regulatory requirement on mortgage intermediaries to assess affordability;
  
• Requiring mortgage intermediaries to assess in every sale whether a product is appropriate to the customers needs and circumstances;
• Requiring that all mortgage intermediaries hold a mortgage qualification and work to appropriate professional standards; and
• Strengthening the sales standards. In particular, we are proposing that:
  - firms assess whether it is appropriate for a borrower to take out a mortgage beyond their planned retirement age;
  - firms explore with consumers whether it is appropriate for them to take a further advance on their existing mortgage rather than remortgage and incur all the attendant costs; and
  - firms explore whether it is appropriate for a consumer to roll-up their mortgage fees and charges into their loan.

Disclosure

• Replacing the requirement for an Initial Disclosure Document with a requirement to disclose key information on remuneration and scope of service early in the process;
• Replacing our existing complicated scope of service labels with the much simpler approach set out in the Retail Distribution Review  – i.e. using ‘independent’ and ‘restricted’;
• Removing the requirement for an independent firm to provide consumers with a fee option;
• Removing our requirement for firms to provide a Key Facts Illustration where they are putting forward a direct-only deal; and
• Changing the trigger points for a Key Facts Illustration to minimise information overload when consumers are considering multiple products.

Who should read this CP?

The proposals in this CP will be of interest to consumers, firms, trade bodies and anyone with a wider interest in mortgages.

When does the consultation end?

The consultation runs until 25 February, 2011.

We will be holding a number of roadshow events for intermediaries during the consultation period. This will give us the opportunity to share views with intermediaries and discuss and debate our proposals. You are encouraged to come along and share your views.

More information about the roadshows is available on our website.