The regulator looked again at 250 mortgage advice firms to identify if improvements had been made following its initial project last year, which found weaknesses in key areas of firms’ advice processes.
The FSA says the overall findings were disappointing and it is telling firms that they must “significantly improve methods of establishing affordability, including gathering better evidence to support their reasons for advice and doing more to take customers’ existing outgoings into account”.
Beachcroft Regulatory Consulting managing director Richard Hobbs says he is not surprised that the FSA’s review found mortgage advice processes to be lacking.
He says: “In the current economic climate, some advisers are finding it ever more difficult to keep their income up, so they are res- orting to increasingly des- perate measures in order to survive. That puts their compliance resources under even more strain.”