SIB issues builders' guidelines

HOUSEBUILDERS who guide prospective purchasers towards mortgage funds were issued with guidance yesterday by the Securities and Investments Board about their position under the Financial Services Act.

When housebuilders refer homeseekers to independent advisers they are exempt from the requirement to register under the Act. But when they introduce clients to tied lenders and this may result in investments being recommended as well as a mortgage loan, then housebuilders need to establish their position under the Act.

They can either be appointed representatives of the investment firm, or register in their own right as introducers.

Those which make only occasional referrals and have no contract may be exempt from these requirements, SIB says.

Mortgage lending and broking are outside the reach of the Financial Services Act, but when lenders also advise on buying an endowment policy as part of the mortgage package they are providing, they are deemed to come within the ambit of the Act.