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WWW 2009

WWW 2009. Case Studies Complaints AML Guide to ICOBs and GI best practise. Case Study 1. Mortgage into retirement

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WWW 2009

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  1. WWW2009 Case Studies Complaints AML Guide to ICOBs and GI best practise

  2. Case Study 1 • Mortgage into retirement • Mr and Mrs James received advice when they recently re-mortgaged. Mrs James is a housewife with no income. Mr James, currently 45 is a teacher and a member of a final salary scheme with a normal retirement age of 60. They were recommended a capital and interest mortgage over 20 years • In teams of four – consider this scenario in terms of best practise

  3. Good Practise • The advisor should have considered reducing the term to 15 years • If the mortgage is to run into retirement: the advisor should conduct two assessments of affordability and recorded both on the file: • Affordability prior to retirement – advisor demonstrates the mortgage is affordable prior to retirement • Affordibility in retirement. Mr James provided details of expected pension income and was asked about changes to expenditure

  4. Good Practise • If 20 year term was agreed: • The advisor explained on the file why a term of 20 years was recommended and that this meant paying the mortgage in retirement with reduced income. • The advisor confirmed that he checked the payments were affordable in retirement but warned Mr James this was based upon current interest rates

  5. Case Study 2 • Jack and Emma Morrison had a number of high interest un-secured debts and were struggling with the repayments. They decide to re-mortgage to consolidate the debt. They have a child at primary school. Jack is a self employed painter and decorator and Emma works part-time in a care home. The existing mortgage had an ERC of £4K with 12 months to expiry. All fees and charges are to be added to the loan.

  6. Good Practise • Obtain accounts for the past 3 years and payslips for Emma • Obtain copies of notice of award – for tax credits • Verify income from bank statements • Prior to the first meeting the advisor provided a check list of documents that would be required: Payslips bank statements details of existing mortgage, I/D copies, details of all debt obligations • Explain the risk of debt consolidation and outline in the file. • Affordability assessment before and after consolidation • SVR risk was fully explained.

  7. Case Study 3 • Peter and Jane are moving home as they wish to start a family and need larger accomodation. They are moving from a 2 bed roomed flat to a 3 bed roomed house. They have been recommended a repayment mortgage as they wished to pay off their mortgage without a repayment vehicle. • Jane is a senior civil servant and main earner, Peter is a Police Officer and his income includes irregular over-time which is not guaranteed. Jane is uncertain when and in what capacity she will return to work after childbirth. She is NOT returning to the civil service.

  8. Best Practise • The advisor took all the above circumstances into account to build up a before and after budget planner (before move/after move same status/after move Jane's Job status change. • Payslips obtained from Peter on a year to date basis. • Advisor uses 60% of overtime to supplement Peters basic salary. • Due to SVR mortgage being taken out – a buffer zone has been applied in terms of affordability. SVR plus a margin. • The advisor used KFI to explain mortgage payments and affordability • Review with the clients the costs attributed to moving home

  9. Complaints in brief • Complaints can be made in writing or orally • All reasonable complaints must be dealt with promptly, whatever the subject of complaint. • Effective and transparent complaints processes must be in place – IDD. • Investigate it • Assess it fairly and promptly - what is it about, should it be upheld, what action/redress should be taken. • Provide fairly and promptly – clear assessment and offer of redress or remedial action • Comply with any offer made promptly

  10. Time limits • 5 working days to acknowledge the complaint in writing. • Final response must be sent in eight weeks. • If unable to do so.... • Must write to complainant explaining why and when you will be able to provide a response. • Must provide them with info in relation to FOS

  11. ICOBs • ICOBs has 3 levels • High Level standards • Additional rules for Pure protection products – CIC, IP, term assurance and PPI • Additional rules for PPI • The overall aim is for you to treat your customers fairly and give them clear, fair and not misleading information

  12. High Level standards • Suitability- • Advice must be suitable • Policy must be in line with clients demands and needs • Must take into consideration the policys level of cover and cost, exclusions, limitations and conditions • Product Disclosure- • Must give appropriate information in good time and in a comprehensible form so that they can make an informed decision • This applies both before and after they buy the product and it includes price

  13. Extra standards for higher risk products • PPI/MPPI • Tell the customer orally about the main characteristics of the policy – significant benefits, limitations and exclusions, duration and price • Make certain the client is eligible to claim on the product before you sell the insurance • Remind the client of the 30day cooling off period (previously 14 days).

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