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Mortgage firms aghast as FSA goes ahead with red tape plan

The FSA is set to stun the mortgage industry this week by pressing ahead with proposals which force lenders to monitor the product information given to borrowers.

Despite industry warnings that the move could be an admin nightmare which may eventually push brokers out of the mortgage market, the FSA has confirmed that lenders will be forced to ensure borrowers get the correct product documentation.

The industry had expected the FSA&#39s proposals to be overhauled radically after sustained criticism since the plans were unveiled in the regulator&#39s consultation paper No 70 last year.

It is expected product information will have to be given to borrowers before a mortgage offer is given and lenders may have the responsibility of guaranteeing that intermediaries are giving the correct information.

The Council of Mortgage Lenders warned in December last year that intermediaries would be unable to cope with the extra costs of administering the additional product information of up to 100 lenders.

Intermediary Mortgage Lenders Association chairman John Heron says: “How do we ensure that this information is provided? Do we individually check each case? Intermediaries are right to be concerned with the additional bureaucracy.”

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