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Consumer panel fights filtering

The Financial Services Consumer Panel has attacked the FSA&#39s mortgage regulation proposals and is warning that the new sales processes will confuse borrowers.

Its response to CP146, the FSA&#39s Approach to Regulating Mortgage Sales, argues against the introduction of three types of selling process – information-only, full advice and a “middle way” of filtering questions falling between advice and information.

Instead, it favours the consumer having a straight choice between advice or execution-only purchase to remove any confusion.

It believes the FSA should concentrate on devising clear and transparent guidelines and disclosure rules for execution-only to ensure consumers understand they are not getting advice.

The panel is the latest body to attack filtering questions which the Mortgage Code Compliance Board has labelled as a “recipe for total disaster.”

The FSA&#39s proposal to scrap suitability letters sent out by brokers under the current mortgage code is also slammed by the panel which says the practice provides useful clarification for consumers.

It is also objecting to what it sees as the limited scope of mortgage regulation which has been set out by the Treasury and the panel is calling for second-charge, buy-to-let and home-reversion equity-release schemes to fall under the FSA&#39s regime.

Panel chairman Colin Brown says: “We agree with the FSA that taking out a mortgage is different from buying an investment product and needs a different approach to consumer protection. But the answer is not to invent a confusing new category of sales process.”

FSA spokesman David Cliffe says: “We welcome their response and will consult on it along with all the others received from the industry.”

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