It will also look at whether consumers are taking out suitable and good value home loans and whether customers are treated fairly over the life of their mortgage, including if they go into arrears.
The first stage of the review last year mainly concentrated on disclosure and advice and selling practices in the prime mortgage market, where the FSA found that things were moving in the right direction, with consumers actively shopping around.
FSA director of retail policy Dan Waters says: “This next stage of the mortgage effectiveness review will focus on more specialised sectors where we think there is greater risk of consumer detriment. We will also look at the treatment of customers in arrears. The findings of the review will help inform our thinking about how we might apply a more principles-based approach to our mortgage rules.”