The FCA has recently updated the rules to allow Mortgage Advisers to complete execution-only sales, even where there has been some interactive dialogue with the customer. This is a new development and means that Advisers now need to be particularly clear on when execution-only applies and how it differs from an advised sale.
In an advised sale, the Adviser is required to take reasonable steps to establish the customer’s needs and circumstances before recommending a suitable mortgage. By contrast, in an execution-only sale, no suitability assessment is undertaken and the customer accepts responsibility for the choice of product.
To proceed on an execution-only basis, the customer must provide the exact details of the mortgage product they wish to take. They must also be offered the option of receiving advice and be told explicitly that, by declining advice, they will not benefit from the protections of the FCA’s suitability rules. Importantly, the customer must make a positive election to confirm they want to continue without advice.
Because of these requirements, Advisers should ensure conversations with customers are handled with clarity and care. Clear documentation of what was explained is vital to demonstrate compliance. This protects both the customer and the Adviser in the event of any future challenge.
Finally, remember that only Mortgage Advisers who hold the appropriate Level 3 qualification and have been signed off as competent can handle execution-only sales. Training and competence checks are therefore essential before firms consider offering this option.
