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FSA to look at cross-subsidies and KFIs

The FSA will review crosssubsidies of customers on mortgage provider books and look at shortening KFIs.

In a speech at the cml conference, FSA managing director (retail
markets) Clive Briault said the regulator is committed to a review of
the practice of subsidising cheap upfront offers with higher rates
for existing business, as recommended by the Miles report. The
commitment forms part of the FSA’s Treating Consumers Fairly
initiative.

The regulator will review the effectiveness of regulation at the end
of 2005 and consider whether further changes to the provision of
advice by and disclosures from firms are necessary.

The FSA said KFIs are not as compact as they had hoped and it will be
including KFIs in its review of regulation.

Briault said the FSA has reviewed its consumer education in light of
mortgage regulation. He said: “We will be seeking to ensure that
firms deliver a fair deal for consumers by including the mortgage
market within our initiative on treating customers
fairly.”

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