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‘KFIs not doing enough to meet consumer needs’

Key facts illustrations offer too much information and do not concentrate on what is important to consumers, according to a report from Beachcroft Wansbroughs Consulting.

The survey of 46 KFIs from 22 lenders says the FSA was unwise to put so much detailed wording into its rules as it conflicts with its aim of reducing the size of the rulebook and concentrating on principles.

The report highlights errors in product providers’ KFIs. One provider’s document only referred to a reduction in interest rates for trackers and not the possibility of an inc-rease. This error could mean that a rate rise was unenforceable if the borrower complained to the Financial Omb-udsman Service.

Lenders’ descriptions of discounted mortgages also varied. The report points to a statement from one lender which says: “A variable rate of 5.5 per cent with a discount of 1 per cent.” It says the statement does not clarify whether 5.5 per cent is the discounted figure or the rate before the subtraction of 1 per cent or after.

Consultant Ian Reynolds says: “We believe the conduct of business rules could be amended to better meet the FSA’s objectives of setting out information that is clear, fair and not misleading and rem-embering it is key rather than the comprehensive information that is required.”

Chelsea Building Society intermediary sales controller Tom Gurrie says: “Since Nov-ember 1, lenders have taken different interpretations of the rules put out by the FSA. This goes against the whole purpose of KFIs being introduced in the first place. We believe anything that clarifies the situation can only be in the best interests of the consumers.”

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