9. The Role of the Mortgage Adviser Flashcards
What is the primary requirement of the advice process?
It’s that any recommendation should be suitable for the customers needs. This is also essential for developing and maintaining the customer relationship and the adviser’s reputation
What is the advice process?
Factfind
Research
Present
Implement
What happens in the fact find?
The advisor should interview the customer to find out as much relevant information as possible. In most cases, the advisor will need to explain terminology, products and procedures so that the customer can give reason and informed answers
What will the fact find interview cover?
Intentions: the customers intended purchase price on the type of property to be purchased
Income and outgoings: to determine how much they can comfortably afford to borrow
Deposit in cash: deposit available and other cash available to meet expenses
Employment: the customers current employment status and history
Management of finances: has a customer manages the finances such as if their bank account is usually in credit or if it is overdrawn it might suggest difficulty with financial management
Budget and rate rises: the customers budget and ability to cope with potential rate rises in the future. This is particular relevant where the customer is looking to borrow the maximum available leaving them with little spare income
Early repayment: the potential/intention for the customer to make early payments
Term: the customer is feeling about the team of the mortgage
Protection needs: life cover, critical illness cover, mortgage payment protection
Attitude to risk: the customers attitude to risk in relation to mortgages which normally takes the form of a risk questionnaire resulting in a risk profile
What are the two factors that the information gathered in a fact-find will establish?
How much the potential borrower can afford each month and the type of mortgage they would prefer
After the fact find what does the advisor need to do?
Identify the most suitable product to meet the customers needs, preferences and affordability, as identified through the fact find.
The advisor must be able to show clearly how the product that is being recommended to the clients precise needs and objectives
How does the advisor present the recommendation?
Having decided the most appropriate mortgage for the customer, the advisor presents their recommendation.
The advisor should ask the customer to read the information and then explain the key details.
The explanations should be in language that the customer can easily understand without the use of technical jargon.
It is vital that the client fully understand why the product has been recommended and they are encouraged to ask any questions express any concerns so that these can be addressed
How does the advisor implement the recommendation?
They begin the application process and submit it to the lender.
The lender is responsible for underwriting the application, however, the advisor will still have a role in liaising between the customer and the lender
With regards to ethical advice what does the advisor need to establish?
The customers needs
The customer circumstances
Customers objectives
Customers attitude to risk
What are the FCA principles for businesses?
Principle 1: a firm must conduct its business with integrity
Principle 2: a firm must conducts its business with due skill, care and diligence
Principle 3: a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management
Principle 6: a firm must pay due regard to the interest of its customers, and treat them fairly
Principle 7: a firm must pay due regard to the information needs of its clients, and communicate information to them in a way that is clear, fair and not misleading
Principle 8: a firm must manage conflict of interest fairly, both between itself and its customers in between a customer and another client
Principle 9: a firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgement

