9. The Role Of The Mortgage Advisor

Question 1

In what ways must an adviser give ethical advice? (3)

Answer 1

1. identify attitudes and needs
2. identify full financial situation
3. offer advice & recommendations that best suit the customer

suitability and affordability

Question 2

What should always be at the forefront of advice?

Answer 2

The customer’s best interest

Question 3

What are the 4 stages of the advice process?

Answer 3

1. Factfind
2. Research
3. Present
4. Implement

Question 4

What should a factfind collect info on?

Answer 4

1. intentions - type of property and purchase price
2. Finances - employment, budget, deposit, management of finance in accounts
3. Time - need for early repayment, term
4. risk & protection - attitude to risk, need for protection products

Question 5

What should an adviser do when making a recommendation to a customer?

Answer 5

Ask them to read the documents but explain the key details to make sure they understand. Encourage them to ask questions

Question 6

Should an adviser’s advice ever be based on commission or bonuses?

Answer 6

No, this is unethical. Should always be what is best for customer

Question 7

What 4 things should an adviser collect information on to be able to provide ethical advice?

Answer 7

1. Needs
2. Circumstances
3. Objectives
4. Attitudes to risk

Question 8

What is the FCA’s main guidance relating to ethical advice? (2)

Answer 8

1. Fair Treatment of Customers
2. Principles for Business learn these

Question 9

What is the aim of the FCA’s new consumer duty (2021)?

Answer 9

To set clearer and higher expectations regarding a firm’s duty of care to consumers

Question 10

Who does the new consumer duty apply to?

Answer 10

Firms who provide services to retail clients

Question 11

What does the new consumer duty require firms to do? (3)

Answer 11

1. Ask themselves what consumers should be able to EXPECT from their products and services
2. ENABLE rather than hinder these outcomes
3. Assess the EFFECTIVENESS of these outcomes

EXPECT, ENABLE, EFFECTIVENESS

Question 12

The new consumer duty also lists the ways in which consumers may be hindered from making appropriate decisions, what are these? (4) WALL

Answer 12

1. WEAK bargaining position
2. ASYMETRIES of information (firm has more info than cust)
3. LACK of understanding/behaviour bias
4. LACK of competition (for firms to improve quality and bring costs down)