July 15 – Advice and Distribution

The FCA post-MMR thematic sets out a number of areas of concern.  All firms will need to read the full text and consider what changes they need to make to their sales processes, quality checking and also the training and procedures for their advisers.

In summary, some adviser struggled to understand how much information on options they can provide to consumers before they move into an advice conversation.  When in an advice conversation, specific product recommendations were provided without first establishing the customer’s needs and circumstances, including too much focus on the cost of the mortgage.

Not sufficient balance was given between the amount the customer has available (budget) versus the monthly payment options, versus the term of the loan.  There is no absolute – more a mix of consumer objectives.  Also concerns were expressed on how some advisers looked at likely future interest rates, and the impact of rises, particularly where they had shortened the term to use the full budget available

The FCA has indicated that firms need improved governance and oversight, particularly in networks, with a new focus required on the quality of advice, with gaps between what was seen on files and the actual conversations that had occurred.