From the 30th July 2020, the Financial Conduct Authority (FCA) expect firms to explain their rationale where they have not recommended the cheapest of the most ‘suitable’ mortgages available from the firm’s product range.
This does not mean that Advisers should focus on price. The FCA still expect Brokers to find out the customer’s needs and circumstances as they currently do. However, once you have stripped down to the Lenders that meet those needs and are not recommending the cheapest one then you should explain why.
This is an area we have always picked up on when reviewing a case as it is important to document why other, potentially more suitable mortgages have not been recommended. It may simply be because speed of service is key, because it is a new build and the Lender that was cheapest is known to be quite slow, or it could be that the customer doesn’t meet that Lender’s criteria. Whatever the reason we would always recommend that it is recorded. This is now emphasised by the FCA Rule MCOB 4.7A.23A(R).
