F ifteen months on from M-Day and confusion remains about how brokers promote mortgages. The FSA has voiced its concerns, saying many intermediaries are not sticking to guidelines on what they can divulge in ad literature, particularly in the lifetime and sub-prime markets.The industry insists that the FSA must change its approach, with many claim-ing the regulator is failing to ensure customers are being treated fairly by forcing brokers to provide “misleading” product information. The FSA is being urged to join forces with the Office for Fair Trading to avoid further confusion among mortgage brokers about promotion rules. John Charcol technical director Ray Boulger says a single rulebook is required, where regulated firms sell non-regulated products, such as buy-to-let mortgages, and are therefore forced to give two APR rates or two risk warnings to satisfy FSA legislation and the Consumer Credit Act. Boulger says: “There is no excuse for the FSA and the OFT, which governs CCA rules, not sorting it out. There has been this problem since October 2004. They have had over 14 months and the two should be getting together. That is not treating custo-mers fairly. APRs are compli-cated figures and many people do not understand them so it is misleading when they are put in twice. When a regulated firm advertises a non-regulated product, it is a mess.” Independent compliance consultant Adam Samuel says: “It might be nice for the FSA and the OFT to get together. The rules are a bit of a mess because BTL is exempt. To have lots of different regimes is stupid and there is a lot to be said for co-ordinating things.” The Association of Mortgage Intermediaries is taking up the case on behalf of its members and has presented its proposals to the powers that be at Canary Wharf. Director general Chris Cummings wants one rule for loan promotion in the secured loans and BTL markets and claims his calls have been met with a favourable response by the FSA. He says: “We are hoping this will form part of the regulation effectiveness review that the FSA is cond-ucting. There is confusion between CCA and FSA rules and we have proposed that the FSA’s rules could be subordinated under the CCA’s rules although any changes would take months rather than weeks. This is an area that has not worked as well as it could do. Having one rule would improve consumer understanding and it seems to be a win, win situation.” But FSA spokesman Robin Gordon-Walker says as part of its effectiveness review into mortgage regulation, the regulator will only make changes if it is satisfied that the existing rules are not working. He concedes that having two sets of rules is making life difficult for the mortgage industry but doubts whether one law covering both regulated and non-regulated activities is workable. Gordon-Walker says: “Would there be logic in making one body responsible for consumer credit? Chairman Callum McCarthy has already said that the practical issues make it difficult. We said we will work with the OFT on payment protection insurance but that is a regulated product, yet buy to let is not regulated so it is a different situation.” It is not all doom and gloom, however. Mortgages plc head of marketing Julian Wells says studies by his firm over the past few months show that the FSA’s high-profile stance is helping the mortgage market understand loan promotion rules better. He believes problems stem from a combination of regulations being too onerous and brokers failing to get to grips with what is required of them. Wells says: “The FSA is very specific so not all firms are hitting the mark. Things like compliance do not come naturally to some people as they are advisers, not compliance people. “Some are unsure on BTL but that should eventually be regulated by the FSA and, when it happens, those problems will not exist. There will be an ongoing educational process and there will be new firms coming into the market so it will be up to the FSA and industry bodies to give more advice.” As well as confusion among firms about BTL and secured loans, the FSA has identified sub-prime and lifetime mortgages as areas for concern, given that consumers looking at these products are often in high-risk categories. Head of financial promotions Teresa Poy says: “We regularly identify promotions that are unclear, unfair or misleading. The regime has had a year to bed in and where we see problems persisting now, we are taking firmer action than previously. “We have seen both positive and negative responses to our regime. As we have always said, we do not want to discourage firms from advertising – we know how important promotions are in creating an effective market. However, we will continue to work with firms to deliver financial promotions that treat customers fairly.” Wells says the confusion experienced by many has changed the advertising landscape, whereby some firms are no longer publishing rates and instead marketing themselves in alternative ways. He says: “Companies are now saying, ‘we can help you get a mortgage’ rather than giving detailed statistics.” But brokers are adding to their woes by making basic mistakes. Samuel says: “I have seen some promotional literature that has so many mistakes, including spelling errors, and have shown the literature to managing directors with scribbles all over where they should make changes.” There is no easy solution to marrying the regulated and non-regulated product promotion rules and brokers cannot rely on the FSA simplifying the regime in the near future. Maybe the way forward is the move to so-called lifestyle advertising, leaving brokers to explain the small print.