To make it easier for homeowners to take sustainability measures, the requirements for execution-only increases were relaxed a few years ago. However, many consumers still need advice before increasing their mortgage. The AFM has now clarified that information already known to the adviser can be used as far as possible. This eliminates the need for a completely new assessment and comprehensive advice.
When an existing client wants to increase their mortgage, a lot of information about their wishes and (financial) situation is already known. The adviser still needs to check that this information is up to date. However, the increase may raise new issues. For example, the risk of death may be a (new) topic of discussion. So it is still important for the adviser to review the client’s circumstances.
Is this new?
In its publication, the AFM refers to this as ”tailored service”. However, the law already requires an adviser to obtain information that is reasonably relevant to the advice in the consumer’s interest. This is an open standard and it is not always easy to determine what is relevant in each situation. This publication gives the industry more clarity on how to apply it in this situation.
The research
At the request of the Ministry of the Interior, research was carried out into a shortened version of mortgage advice. A pilot showed that the shortened advice process appeared to work well for both advisers and consumers. The time savings were found to be mainly in the advice phase. As the intermediation phase is still relatively time-consuming, advisers expected the reduction in advice costs to remain relatively limited.
One of the recommendations in the research report was for the AFM to clarify the possibilities of this shortened advice. The AFM has responded with this publication.
Check service documents
The AFM’s clarification only refers to the public law rules on advice (the Wft). Of course, the adviser must also comply with the civil law rules on the duty of care. It is advisable to check whether the agreements on the scope of services are in line with practice in the event of a sustainability-related increase.
Want to know more?
If you have any questions about the information in this article, please feel free to reach out to the author, Paul Schuiling.
