The FSA has found areas of non-compliance by firms with arrears rules as part of the second stage of its mortgage effectiveness review.
It says it is undertaking focused thematic work on the arrears management practices of firms to establish whether such problems are indeed occurring. The results will be published in June.
It says the second stage of its mortgage effectiveness review will help inform the wider review of the mortgage conduct of business regime, as announced in the regulator’s business plan for 2008/09.
The second stage of the FSA’s review focused on consumer experiences in the sub-prime and lifetime mortgage sectors of the market.
Its mortgage effectiveness review found that in neither market do consumers make a distinction between receiving advice or information-only, and the Initial Disclosure Document is not prompting them to think about the level of service they might get.
In addition, both sub-prime and lifetime consumers see the Key Facts Illustration as an important and useful document for helping them to check points of detail and clarify uncertainties, but not for product comparison and shopping around.
The research also found that sub-prime consumers rely on their broker and accept their broker’s recommendation. Most lifetime consumers also rely on their brokers. Both sets of consumers focus heavily on price, with sub-prime consumers concentrating particularly on initial payments,
Director of retail policy and themes Dan Waters says: “The Mortgage Effectiveness Review is an integral part of the FSA’s programme of work on mortgages, and will help shape the future of our mortgage conduct of business regime. It sits alongside our thematic work and close supervision of individual firms, and forms part of the balanced and proportionate approach we are taking to ensure the fair treatment of consumers.”