Mortgage intermediaries advised on offering structured products

The Association of Mortgage Intermediaries (AMI) has released guidance to its members warning of the potential risks when selling structured products alongside mortgages. The guidance is issued as mortgage firms and intermediaries seek to diversify amid tough market conditions by offering structured products and other investments to clients.

Andrew Strange, policy director at AMI, explains that if an independent mortgage adviser subsequently provides a client with a direct offer of structured products, then this move from advice to direct offer is potentially a move away from providing independent advice. "We want to make sure that members know there needs to be a distinction, particularly in the eyes of the client" says Strange. "You need to make sure the clients are aware of the limitations of the advice you're giving or the direct offer you're presenting," he adds. While the AMI does not foresee problems in mortgage advisers offering structured products, the guidance is to highlight potential risks to members and enable them to make informed decisions.

Specialist mortgage lender Kensington recently moved into the structured products arena by distributing a range of continuously available products launched by parent company Investec. "AMI is quite right in pointing out that there are a number of factors a mortgage intermediary must consider before diversifying into this area, which is why lenders, such as Kensington, are on hand to offer full support to intermediaries through their sales team," says Keith Street, head of Kensington.

With the support of its parent company Investec, Kensington's Business Development Managers are well informed to discuss issues that an intermediary may have before offering structured products to clients. "It is good to see that AMI recognises the need for mortgage intermediaries to diversify in the current environment and supports the distribution of savings products as one route for this diversification," says Street.

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