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Fears that FSA filter puts public at risk

Mortgage experts are warning that the FSA&#39s proposal to introduce filtered questions which are not categorised as advice as part of its regime for the regulation of mortgage advice will put consumers at risk and could lead to misbuying.

With the deadline for responses to CP146, The FSA&#39s Approach to Regulating Mortgage Sales, set for November 11, lenders and brokers are listing “non-advised filtering questions” as one of the main bones of contention.

Other issues being raised in the consultation are the potential threat to consumers of not regulating second-charge mortgages and equity-release reversionary schemes and the need for the FSA to provide a clear definition of what constitutes an independent mortgage adviser.

The Mortgage Code Compliance Board says two of its main concerns are over the FSA&#39s proposals to scrap reasons-why letters and the full disclosure of fees.

Scottish Widows Bank believes all equity-release schemes should be regulated as they can be high-risk products.

Brokers Mortgage Talk and Paradigm Consulting are both warning of the devastating effect that the proposal to ban cold-calling will have on brokers&#39 and lenders&#39 profits.

Britannic Money warns in its response: “There is a real danger that non-advised filtering questions could be mistaken by consumers for advice. We also believe there is a danger that the process will select unsuitable products and without the involvement of a qualified adviser, there is a possibility of misbuying.”

Prudential Premier Mortgage Club national manager John Malone says: “If you look at the product range in the UK, including lifetime, flexible, self-certification and sub-prime mortgages which make up over 50 per cent of the market, advice is needed from a qualified adviser, not filtered questions.”

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