Within the CeMAP exam syllabus, affordability is an issue discussed. Mortgage advisors have to offer affordability advice, however, according to a recent report by the mortgage regulator the Financial Services Authority (FSA), mortgage advisors have not done enough to improve this advice.
The report investigated both affordability advice and the companies that handle customers in arrears or facing repossession.
This study included over 250 mortgage guidance companies. Since the Quality of Advice report issued last year, highlighting weaknesses in many business processes, the new report showed little evidence of improvement.
The FSA discovered approximately three quarters of companies subjected to a mystery shopper assignment did not scrutinise the affordability criteria sufficiently. This was partly because they did not calculate clients’ outgoings.
Some companies also failed to assess their client’s affordability regarding the mortgage term itself, for example where it would run past the client’s retirement age.
We wrote recently about a report from Which? where many mortgage advisors were found to offer a substandard level of help and guidance.
Over 41 intermediaries failed to provide the researchers with at least one piece of important information.