The mortgage industry has been criticised by the FSA for its poor disclosure on documentation.It says firms are using too much jargon in key fact illustrations and this is making it difficult for the financially illiterate to understand them. It wants companies to focus on writing the KFI in plain English. The FSA says the problem applies both to standard KFIs and those used for lifetime mortgages. The latest criticism of the market comes after the regulator’s effectiveness review of its regime in the prime sector last month which found an alarming number of advisers not handing out initial disclosure documents, with the practice particularly poor during phone sales. In June, it reported that while overall disclosure standards are improving, 25 per cent of the KFIs reviewed that were issued by small and med- ium-sized intermediaries and small lenders still contained errors. Research from BM Solutions has also found that many consumers do not understand industry acronyms, with 50 per cent having no idea what LTV – loan to value – means, and 42 per cent unclear what KFI stands for. In a report prepared by BMRB Social Research, the FSA says: “Consumers with lower levels of financial literacy had difficulties with certain aspects of the KFI. These included the service being provided by the mortgage firm, insurance, early repayment and overpayments. The presentation of calculations, interest rates and the use of percentages were also problematic. “Firms are expected to use plain English descriptions. In some instances, jargon or technical terms were used and not explained, which affected the clarity of the KFI, and hindered the consumer’s understanding of the document, irrespective of their level of financial literacy. A clear message is that firms should focus on writing plain English descriptions of their products and features.” Hamptons International Mortgages technical director Jonathan Cornell says: “The industry gets the templates from the FSA so it has to take some responsibility.”
Rereading last week’s column made me realise that I may have been responsible for misleading people over the performance of the US stockmarket. My reference to Wall Street moving into new high ground related specifically to the recent recovery in the Dow Jones Industrial Average. This index is almost certainly the most widely quoted in the media when it comes to remarking on how the world’s biggest stockmarket is behaving but is not representative of the market as a whole.
The outlook for UK equities is positive, particularly for investors who take a long-term view
Pension advisers can bid for customer leads in a scheme developed by Paaleads.com. The lead-generation firm, which last week launched a bidding system in the mortgage market, is set to add pensions on October 24 and claims to be the first lead-generation firm in the pension sector. The system gives priority to the highest bidder. […]
Defaqto has revealed that private medical insurance following the PruHealth approach can result in premiums up to 44 per cent cheaper than the competition. The research company says when it compared the first year premiums of five key PMI providers – PruHealth, Axa PPP, Norwich Union, Bupa and Standard Life – first year premiums can […]
The theme of ‘creative destruction’, or the impact of new technology, gathered pace in 2015. But which companies make an attractive investment? Stephen Moore, manager of the Artemis US Extended Alpha Fund, reviews. Click here to read the full article
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