The OFT is urging mortgage providers to develop a bench-mark-based code of practice to help produce a genuinely competitive market.
OFT director general John Bridgeman, who was speaking at a Money Advice conference in London, said he believed that self-regulation would only be successful if product providers have standards to meet rather than laws to comply with.
Bridgeman says: "We need better regulation not more. If product providers have standards to meet then we will have a win win situation. The consumer receives a quality product and the quality product provider does not lose out to the inferior product."