Trading standards officers have unleashed an unprecedented attack on brokers and self regulation following a covert survey which revealed systematic mortgage misselling.
The survey of 166 brokers by the Local Authorities Co-ordinating Body on Food and Trading Standards, the national co-ordinator for trading standards, found brokers were either unfamiliar with the Council of Mortgage Lenders voluntary code of practice or were unconcerned about it.
The survey found:
* Only five per cent of brokers visited met all of the code's requirements.
* Forty per cent of brokers were considered to have offered "inadequate advice and information", for example, by neglecting thorough fact finds.
* A third failed to declare whether they were representing a panel of lenders or had access to the whole market .
* More than a quarter did not mention whether they received a fee for arranging the mortgage.
The survey calls for new statutory controls to protect consumers and that the CML and MCRI take swift action to raise industry standards.
A total of 19 local authorities from around the country took part in the mystery shopping visits during July and August this year.
Trading standards officers took on a variety of guises and secretly taped their visits to use as evidence.
The survey coincides with a Government review of the regulation of mortgages and increasing public disquiet over mortgage linked endowments.
Many lenders are already preparing procedures for statutory regulation, which is understood to be inevitable.
The survey concludes: "The reality found by the survey is that even leading businesses find it difficult in practice to meet the full range of code obligations.
"Of yet more concern must be the high number of businesses which still appear unfamiliar with the most basic principles of the code."
CML director general Michael Coogan says: "We are looking at the findings to assess what further action needs to be taken and we will also want to look at the findings of the MCRI's survey due next month."