The MMR regulations are intended to “protect consumers from themselves”, transferring responsibility for selecting the right product from the consumer to the lender.
Tim Johnson, chief executive officer of Paymentshield, said: “As lenders are now fully responsible for assessing whether customers can afford their loans, it is now more important than ever to offer bespoke mortgage products.
“The MMR is designed to ensure that the customer is protected. As such, the industry must also ensure that all brokers are fully qualified and give appropriate advice. Organising robust supervisory and monitoring schemes would be ideal for lenders, as this offers them further security.”
Under the regulation all mortgage transactions are undertaken on an ‘advised basis’, meaning lenders will be required to train and qualify their staff to give mortgage advice.
There will be more stringent checks on individuals’ ability to repay the loan, particularly related to interest.