Information on mortgages still needs improving
The Consumer Panel today welcomed the publication of FSA research to assess how mortgage disclosure documents have improved since last year's review which had found wide ranging problems in compliance with the rules.
Although mortgage information provided by large lenders has improved significantly, and small firms' information is also improving, there are still major concerns about the quality of information being provided by mortgage intermediaries:
Around a quarter of intermediaries' Key Facts Illustrations (KFIs) contained inaccurate or contradictory information on the fees and charges the customer would have to pay. This is far too high a proportion giving confusing messages on fundamental information.
55% of intermediaries' initial disclosure documents (IDDs) had 5 or more errors. Some of these errors may be small, but combined together they could significantly undermine a consumers ability to recognise the best mortgage deal for them when shopping around.
In general the research showed that KFIs are still too long. These documents were designed to allow consumers to compare mortgages, but with more than half of the FSA sample over 6 pages long, consumers will be put off from comparing.
The Panel was pleased that the FSA plans an innovative range of measures to tackle the issues and improve mortgage disclosure compliance in the different parts of the mortgage market. The Panel has encouraged the FSA to keep up the messages to consumers to use key facts, and read them carefully to help to take important financial decisions, because overall they provide accessible and important information about mortgages.
The Chairman of the Financial Services Consumer Panel, John Howard said:
"If consumers can see clearly what mortgages they can buy and how much the alternatives will cost, then they can take an informed decision and have confidence in the market. We have been disappointed that many firms have not responded more quickly to the straight forward requirements in the FSA rules. This means that consumers are being poorly treated in too many cases. The FSA needs to keep a close watch on how firms respond to its latest initiatives. "Notes to editors
The Financial Services Authority has today published its review of mortgage disclosure requirements. Details of this are published on its website – www.fsa.gov.uk
The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.
The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on this website.
The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.
There are currently eleven members of the Panel as listed below (for further information on individual members, see the Panel's website).