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‘Kfi burden is stifling creation of flexible plans’

The burden of producing coherent and detailed key facts illustrations may be slowing innovation in the mortgage market, says GMAC-RFC executive chairman Stephen Knight.

He says the extra responsibility of having to create a KFI along with a product may be slowing down the process of introducing flexible and interesting products.

Knight feels the FSA did not realise how complicated a task it would be to create compliant KFIs for single products which involve different types of mortgage such as a capped rate followed by a fixed rate.

As a result, a client who has KFIs sourced for them from three lenders could effectively end up with 24 pages of mortgage information to read.

He feels the FSA should have made it clear what it was expecting from lenders’ KFIs before M-Day.

Knight says the FSA’s current advice “little is more” comes too late as KFIs vary from between four and 13 pages. The FSA made recommendations on what was desirable rather than was practically achievable, the result being illustrations that vary in length and content from one lender to the other.

He says: “The FSA has done a good job of regul-ating the mortgage market, having been forced to take on the responsibility, but the implications may be resulting in an outcome that the FSA did not intend.”

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