Social media and text advice will bring new challenges

Firms that offer advice on mortgage deals by text and live web chat must still assess whether the mortgage is appropriate for the customer, the Financial Services Authority (FSA) said today.

Technological developments will increasingly lead to communication being made in this way, the regulator’s Mortgage Market Review said, and it was “perfectly possible” for mortgage advice to be offered via social media sites, texts and instant messaging on mobile phones.

The report said: “Although their use is still quite limited, the importance of these forms of communication for firms will continue to grow as one generation gives way to another, and social media and ‘smart devices’ become increasingly popular.

“We are also starting to see the development of online systems in direct sales, which provide consumers with a ‘live chat’ option, where an individual within the firm will answer questions from consumers online in real time.”

The authority went on: “We propose that all sales involving some form of interactive dialogue between the intermediary and the consumer – whether face to face, over the telephone, through social media, mobile devices, online propositions with the facility for live chats or otherwise – will be advised sales.

“This means that an intermediary must always assess whether a mortgage is appropriate for the consumer based on the consumer’s particular needs and circumstances.”