Tackling barriers: The Protection Gap

AMI Senior Policy Adviser Stacy Penn discusses the Perception Gap in the protection market, in this article originally published in Moneyfacts…

The FCA in the insurance space – a more assertive regulator?

Following introduction of Consumer Duty, we have seen signs the FCA is shifting towards becoming a more assertive regulator…

The Perception Gap

AMI Senior Policy Adviser Stacy Penn discusses the findings from AMI’s latest Protection Viewpoint – The Perception Gap, in this article written for TMA Club…

Consumer Duty: The next steps – what does 2024 have in store?

On 6th December 2023, the FCA hosted a webinar titled Consumer Duty: The next steps – we draw out the key points of relevance to mortgage intermediary firms…

Your January update from AMI Chief Executive Robert Sinclair

AMI Chief Executive Robert Sinclair gives his January update, reflecting on the challenges and opportunities of the year ahead…

Deadline reminder for approvers of financial promotions for unauthorised persons

An important update from the FCA on the 6th February deadline for approving financial promotions for unauthorised persons…

Edit Content

Log in here for full access to all our great content


Please log in below with your username (which is your email address), using all lower-case letters.


Forgotten your password?
No problem, simply tell us you have forgotten your password to receive instructions instantly via email.

Having problems logging in?
If you are a current member but are unable to login, please first make sure you are using all lower-case letters for your username/email address. If you still have difficulties, please contact us via email at info@a-m-i.org.uk so we can rectify your problem.

Not a member?
Learn more about the benefits of becoming a member or apply online and we will be in touch.

There are currently some phenomenal longer term fixed rates on offer, but something seems to prevent UK consumers from opting for these attractive options.  In a world where advice is now the norm, understanding consumer needs and their attitude to risk is key.  So in making recommendations any adviser has to be mindful of committing the consumer to a product that might leave them with limited flexibility to move, raise further funds or make additional repayments.  This has been exacerbated by the reaction of some lenders who have made porting their product a lot more difficult.  The prescriptive application of terms and conditions or applying affordability measures that are not required by the FCA has driven caution amongst some advisers.  This is a natural reaction against the product rather than a more measured approach against certain lenders.  There is a need for the more responsible lenders to apply pressure on their peers.

It might also be that the consumers most likely to take up these longer term products are still tied into another fixed rate product.  There are also still many consumers who are property or product prisoners, often due to historic self-certification or interest only borrowing.  So the flood might have to remain a trickle.

One of the product features that most limits an advised recommendation is the level of early repayment charges.  Where these are both significant and flat over the product term, it is difficult to justify recommending a longer term product.  The European Mortgage Directive, which comes into effect in March 2016, states that the lender is entitled to fair and objectively justified compensation for potential costs directly linked to early repayment of the credit and should not exceed the financial loss of the creditor.  This should drive more graduated redemption penalties, with lenders taking a more balanced view on the real costs of settlement once half way through the term of any fixed term product.

If we could see longer term fixed rates with early repayment charges that reduce over the term to zero towards the end of the term then we will see more consumers likely to want to play.  Will lenders come to the party?

Robert Sinclair


Forgot Password?

Join Us