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FSA quality of mortgage advice probe reveals failings

The Financial Services Authority has revealed ongoing failings by firms in preliminary findings from its quality of mortgage advice investigation.

In a speech by FSA head of mortgages and credit unions Michael Lord this week, he also revealed that only one initial disclosure document presented to the regulator at its recent series of roadshows, from the 300 firms that have attended, was completely compliant.

The regulator says early analysis of the quality of advice results has mainly identified concerns about affordability, lending into retirement, interest-only mortgages, and training and competency.

The full results of the investigation, which included mystery shopping, firm visits and desk-based interviews into brokers’ and lenders’ practices, are not expected until later this year.

Most errors on IDDs were small, such as putting insurance and mortgage information in the wrong order, and spelling mistakes. Lord also urged brokers to keep good records to help fend off any future claims against them.

Money Marketing revealed in June that the FSA planned to carry out the quality of mortgage advice work. It is in addition to probes into the sub-prime, self-cert, interest-only, mortgages into retirement, equity release and payment protection insurance sectors – although some cross-over is expected.

FSA spokeswoman Sam Bennett says: “These are very early findings and more will become apparent later in the year. Michael Lord mentioned that across the market there are issues with affordability, lending into retirement and training and competency, and interest only mortgages. On record-keeping, if there are issues in the future and advisers have kept records, then it will help them.”

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