What does the Factfind do?
Collects the clients info, wants, needs and attitude to risk.
What is involved with researching the solution?
Identifying the most suitable product.
What is the ‘Recommendation’?
This is where the client makes an informed decision and is provided in an ESIS. The advisor must explain all the key details.
What happens when you implement a recommendation?
This is when the customer has made an informed decision and a full mortgage application starts.
What is ethical advice?
- Treating customers fairly
- Advisor needs to establish the customers needs, circumstances, objectives and attitude to risk.
What are the 6 consumer objectives to FTOC?
- Firm is committed to the fair treatment of consumers
-Products meet the needs of identified consumer groups - Clear information at all stages
- Advice is deemed suitable
- Products perform as expected
- Consumers do not face unreasonable barriers
What is new consumer duty designed for?
Sets clearer and higher expectations for firms ‘Standards of care’ towards consumers’.
Who takes the proactive approach within a business for new consumer duty?
Senior management.
What is a consumer principle?
A firm must act to deliver good outcomes for retail customers.
What are the 4 outcomes as part of the firm-customer relationship?
- Communications equip customers to make effective, timely and informed decisions
- Products meet customers needs
- Customer service meets needs of customer
- Price is of fair value
Who is responsible for the assesment of affordability?
The lender.
What did MMR do? (Mortgage Market review)
Reviewed affordability and made it clear that mortgage multiples can be used as a guide to max loan but affordability needs to also be measured by ‘free disposable income’.
What does the lender need to do with maintenance/child maintenance payments?
Ensure there’s a court order and that it has a suitable remaining term.
What is self-employed income based on?
Net profit before tax.
What is a balance sheet?
A statement of business assets and liabilities.
The balance sheet shows underlying stregnth of a business by showing:…?
- Capital used to establish the business
- Capital injected into the business
- Surplus profits from previous year
- Personal drawings of the business
What shows past performance?
Profit and loss account.
When are company directors treated as self-employed?
When they own more than 20-25% of a business.
How do directors who are also shareholders get paid?
Pay themselves a small salary and dividends - More tax efficient.
What is meant by a directors loan amount and what is the advantage?
It is how much the company owes the director and tax free withdrawals can be made from this.
How long is affordability held on record for customers?
The duration of the mortgage.
Wat is affordability based on?
The applicants free disposable income.
How does the lender combat the issue of future rate increases?
Interest rate stress test.
Why is an interest rate stress test done?
To ensure the mortgage will be affordable if interest rates increase over the next 5 years.
