View more on these topics

FSA’s mystery shopping reveals mortgage shock

An FSA mystery shopping exercise found more than half of mortgage firms are still not complying with rules on the provision of disclosure documents, nine months after M-Day brought in regulation.

Findings show a shocking 55 per cent of the 82 visits to 62 mortgage lenders and brokers found non-compliant behaviour.

The mystery shopping exercise was undertaken to establish whether firms were providing two key documents required by regulation to inform customers about the type of service a firm provides and about the cost, features and risk of a particular mortgage proposal.

The exercise found 28 per cent of firms failed to provide an IDD or KFI, 15 per cent failed to provide both an IDD and KFI and 12 per cent provided the documents but not at the right time.

Two-thirds of 20 lenders’ websites complied with some but not all requirements. For example IDDs were sometimes not displayed appeared at the wrong time.

Association of Mortgage Intermediaries director Chris Cummings says he is disappointed by the results of the mystery shop and intends to give further guidance to members who wish to seek greater clarity of the FSA regime.

FSA managing director of retail markets Clive Briault says: “We will continue to monitor closely firms’ distribution of these documents through further supervision work. If we find that some firms continue in these failings, we will take this very seriously and the appropriate action will be taken, including enforcement action if necessary.”

Cummings says: “These are serious criticisms and, as they follow issues highlighted by earlier research on equity release, they should be seen as the final wake-up call. If we cannot sort these problems out it seems certain that tougher supervisory action will follow.”

Recommended

Brief encounter

James Salmon follows the progress of Aifa’s Stakes in the Ground initiative to protect IFAs against retrospective regulatory action

Dumb and dumber

I have a confession to make and would be grateful if readers would keep it a secret from my employer and my wife. As someone who has been reputed to know a reasonable amount (for a journalist) about personal finance, the information contained here could be highly damaging to that reputation.

Aegon recovers in Q2

Aegon’s life and pension sales bounced back strongly in the second quarter of 2005. Sales in Q1 took a hit as the impact of commission cuts on certain pension product lines took effect but Q2 sales were 22 per cent higher than in the same period of 2004. UK earnings rose by 40 per cent […]

Fed up and more rises on the way

The US Federal Reserve’s to lift interest rates, in stark contrast to the Bank of England’s cutting strategy, has not surprised industry experts. Last week, the Fed increased rates by 0.25 per cent for the 10th consecutive time to 3.5 per cent. F&C head of strategy Paul Niven says the market expects increases of 0.25 […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment