Speaking at today’s Financial Services Expo in Manchester Keith Hale from the Financial Conduct Authority outlined the regulator’s new position on commission disclosure for advisory firms when the European Mortgage Credit Directive is implemented from the 21 March 2016.
He said: “You will have to tell the customer that they can ask you about the levels of commission you could have received. Advisers will have to list all the lenders’ commission levels of all the loans [they] could have accessed on a piece of paper.”
Advisers in the FSE audience expressed some surprise at the new requirements and questioned how they would be able to collate such information and the potential length of document required, which might need to list the commission levels of every single lender in the marketplace.
There were also questions about the level of record-keeping required by the new rules and how advisers would document that a customer hadn’t requested the commission disclosure information.
Hale said: “The document is an ancillary one to the initial disclosure and you only have to give it out if the consumer asks for it.
“However you have to tell the consumer that they can ask for it. Every intermediary will need to provide a mortgage-specific disclosure document.
“There is however no obligation to provide documentary evidence that the consumer did not ask for the document.”
Hale acknowledged that this was a somewhat perplexing requirement and the potential problems involved in collating this information – he suggested networks, mortgage clubs and sourcing systems might wish to provide a standard form of the information to allow ease of use for advisers.