Fairfax: Brokers should stick to regulated packagers
Unregulated packagers can put authorised brokers at risk due to their lack of future liability while there always being a risk that they could prioritise making a profit, he added.
Fairfax said the Financial Conduct Authority should follow the lead of the Solicitors Regulation Authority which does not allow solicitors to refer to unregulated barristers.
He said: “In my opinion the existing process is not right. If you are involved in a regulated mortgage contract, be it directly with a customer or via another authorised broker, you should be regulated.
“You would think that similar rules handed down from the Financial Conduct Authority would exist, preventing the involvement of unregulated packagers in regulated mortgage contracts.
“This current system is ambiguous with too many grey areas. It makes sense to me that somebody heavily involved in product selection for a customer should be culpable in the event of bad advice.“
Linda Woodall, speaking at Financial Services Expo in London last year, said unregulated packagers were “overstepping the mark” by giving advice.
She added: “So long as the packager has no contact with the customer and runs a business-to-business operation then they do not need to be regulated.
“But where a packager deals with customers directly, they need to be regulated and ensure that staff have the necessary qualifications.”
Fairfax added: “Would you be able to defend your advice and provide a compelling suitability letter and compile a compliant file?
“If the answer is “no” then you really should be looking to a regulated packager for a “referral only” service.”