There has been much talk about the FCA forcing customers to go execution only as a result of their Consultation Paper on mortgage advice and selling standards. Or that customers will be steered away from getting good advice. However, I believe that, if anything, the consultation paper will help the customer get the right advice for them.

The current guidance has become difficult to work with as firms try to develop ways of working which reflect how we conduct business today. The majority of people shop, book travel, update driving licences and buy their insurance policies over the internet. We find it convenient to sit on the sofa, comparing products and checking prices, pausing an application to find the car log book or using web chat to find out whether we can fly from Bristol rather than Heathrow airport. With many lenders reacting to customer demand and having extended their regional remit to nationwide coverage, we may not be able to speak with a person face to face to ask our questions. Given these changes, some lenders have come to think that even answering technical questions on the phone is ?interaction? and that therefore the customer would have to receive full advice, when they only want to know how to load up a payslip.

Firms want to cater for all their customers? needs and develop tools that provide generic information to customers and brokers to assist with the full advice option as well as execution-only mortgages. Yet lenders have found it difficult to interpret what is meant by the regulator's guidance on ?implicitly steering? in the context of the provision of general advice or in an execution only. 

As in the case of investment advice, the amount of, or how adviser and borrower interact should not be relevant in determining whether regulated advice has been given. Rather, it should be whether any recommendation has been made. Customers should be able to ask for factual information (and firms should be able to supply it as many times as they like) without the interaction constituting regulated advice. When a formal recommendation is made it should be clear to the customer that this is what they are receiving.

The consultation paper also makes it clear that lenders can price differently for execution only and advised sales. Some people have said that this will push customers away from advice. I prefer to think of the similarities with the full retail service provided by John Lewis and buying online at Amazon. Yes, there will be some customers who withdraw from an advised sale at the very end of the process, so maybe there is an opportunity for both lenders and advisers to reconsider their charging structures.

However, what UK Finance members are asking for is flexibility in the provision of regulated and non-regulated advice, as well as clarity as to what does and does not constitute regulated advice.

Digital Mortgage Transformation will be a key topic at the upcoming Digital Innovation Summit which features a stream dedicated to The Future of Mortgages. Learn more here.