FCA Suitability Rules

househunter7

Hi All,

Apologies if this is a basic / stupid question.

I have an agreement in principle, but have found a better offer with another provider. However, I have come across the below terms, for applying online. Mainly the part in bold, peaked my interest.

“You can apply online whenever it suits you. You need to be aware, however, that by choosing to apply online, we're not able to give you mortgage advice. ‘Mortgage Provider’ cannot assess the suitability of the mortgage product(s) that you select online. This means you won’t benefit from the protection provided by the Financial Conduct Authority’s rules which otherwise require mortgage lenders to assess the suitability of such mortgage products. As a responsible lender, we'll consider whether your mortgage payments and any associated repayments meet our credit policy.”

While I always intended to discuss with a Mortgage Advisor, or Bank Advisor, does this mean there will be no affordability / suitability checks, other than what they would normally conduct on other Finance Products, such as Personal Loans? Surely this is quite concerning?

Thanks

saajan_12

They would still do affordability / valuation checks to satisfy themselves that you won't default.

It just means they aren’t advising you on which product features suit your needs best as you are choosing online yourself. For example, you can’t claim you shouldn’t have been sold insurance you don’t need if you selected it online. You can’t claim you don’t know an interest only mortgage needs paying off in full at the end of the term. Etc etc.

G_M

They'll assess whether you meet their lending criteria. They won't assess whether the product is suitable for you sine they'll have very limited understanding of your overall circumstances.

Common sense really.

kingstreet

You will have given up your right to redress if you later discover a five year fixed rate was wrong for you because you will have chosen it yourself and not been advised to take it.

Suitability and affordability are totally different.

newtothis141414

Just to add to what has been said, essentially they're saying they haven't chosen the most relevant product to suit your needs because you've chosen not to use that service. Essentially you make up your own mind based on the product literature you'll be given at the point of sale. What Sajaan has said isn't 100% correct though - you can complain in the future about any of the features of the mortgages, but you'd have to show that the product literature was misleading. So for example, you come to remortgage and you're asked to pay an ERC but it wasn't explained anywhere. But that is fairly rare now, as banks have clued up on this. At least the big lenders.

saajan_12

newtothis141414 wrote: »

What Sajaan has said isn't 100% correct though - you can complain in the future about any of the features of the mortgages, but you'd have to show that the product literature was misleading. So for example, you come to remortgage and you're asked to pay an ERC but it wasn't explained anywhere.

What wasn't correct? I didn’t say you can’t complain if they lied about / omitted terms in the paperwork. I said you can’t complain if a product wasn’t suited to your needs, since you chose it. So if there’s an ERC, ofcourse they have to clearly state the terms of what circumstances trigger the charge and how much etc. However they don’t have to know if you might want to sell soon so you need a mortgage without ERCs.

kingstreet

newtothis141414 wrote: »

Just to add to what has been said, essentially they're saying they haven't chosen the most relevant product to suit your needs because you've chosen not to use that service. Essentially you make up your own mind based on the product literature you'll be given at the point of sale. What Sajaan has said isn't 100% correct though - you can complain in the future about any of the features of the mortgages, but you'd have to show that the product literature was misleading. So for example, you come to remortgage and you're asked to pay an ERC but it wasn't explained anywhere. But that is fairly rare now, as banks have clued up on this. At least the big lenders.

True, but that isn't about suitability.

Thanetia

The FCA's Mortgage Market Review made mortage Lenders explicitly responsible for confirming affordability of your loan - basically in response to the mess created by self cert. Hence their comment they will check this, and the ckechs now beinh much more thorough than previously.

Regarding advice on the actual product to take, again MMR set a landscape where advice is the preferred option for most people - either from a Bank or B/S adviser, or a mortgage broker (latter much better). You can still DIY via non-advised channels like online services but you, as other have already said, are then liable for your choice of product and its suitability for you.