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The FSA has released the final MMR rules today, the FSA is looking to bring order and put more common sense into the market and provide more protection for consumers.
The rules come into force on the 26th April 2014, most of which relate to lenders, we have summarised below the key points for intermediaries. Over the coming months we will examine the rules in detail and all H3 clients will be made aware of the changes and requirements and be fully prepared for the changes in April 2014
- Firms will be unable to provide non-advised sales in relation to all 'interactive' sales”. Any sales done face-to-face or over-the-phone - must be 'advised' sales from April 2014. Some exemptions apply such as if the customer is a mortgage professional, a high-net-worth individual (£300k income or more). All non face to face or telephone based sales – such as postal or over the internet can be conducted on an execution-only basis.
- Advice will however not be needed for simple contract variations such as rate switches or amending the terms of repayment, as long as no additional borrowing or amount to be repaid
- Brokers will no longer be required to assess affordability - a relief to most firms!
- All staff selling mortgages must hold a mortgage qualification.
- Interest only mortgages can only be offered when the borrower can provide a credible repayment strategy – so no reliance on house price increases.
- The IDD or CIDD is to be replaced and brokers will instead have to disclose key messages to clients – exactly what an IDD did!
- To reduce customer overload of information the trigger points for KFI presentation have been changed.
- Treating a customer fairly still applies – naturally!
For full details of the final MMR rules click here.