Mortgage Introducer’s campaign aims to get a standardised KFI introduced amid concerns that some lenders’ KFIs are coming out as long as 14 to 15 pages.
Lending his support, Richard Humphreys, principal of The Mortgage Trader, said: “I must agree with brokers’ comments in your 11 December 2004 issue of Mortgage Introducer – News. Before ‘Mortgage Day’ clients could sit with an adviser and compare products with the old illustrations and make a decision. Now they look defeated before they even start to compare when half a rainforest is put before them.”
Humphreys explained that clients are so put off by the length of some KFIs that it could possibly lose brokers business. “I feel advisers lose an element of credibility when they provide what is a lengthy explanation of a mortgage product (the KFI document). After all, the reason the client got an intermediary involved was to help make the process easier for them. Now all they want to do is think about it, and if I was in their shoes, I would too.”
He added that the right way forward is a front page containing the important information needed for a client to make a decision, followed by four pages of details.
And Nick Phillips, financial adviser at Dowen Financial Services, agrees: “I am of the opinion that the standardisation of KFIs is absolutely imperative. If this does not happen I feel that the majority of clients will be even more confused as to what they are buying than before ‘Mortgage Day’.”
And despite the FSA’s announcement this month that it would start to look at reviewing KFIs, the Council of Mortgage Lenders (CML) has told Mortgage Introducer that this issue still does not warrant its intervention.
Sue Anderson, head of external relations at the CML, said the FSA should be careful that it is not ‘held to ransom’ over the issue of KFIs, where the regulator may find essential information is taken out of the KFI and then has to be added back into the documents in the future.
Anderson added: “We think the basic rules that govern KFIs should not be tampered with as it would create more uncertainty. It is between the FSA and particular lenders to discuss these issues of lengthy KFIs. The CML cannot bring anything useful to the table about what it thinks is a good KFI and bad KFI. Length is not necessarily bad. It depends on the case.”
But Sally Laker, managing director of Mortgage Intelligence, said: “The FSA had examples of what it expected KFIs to look like and they were all about four pages long. They certainly weren’t 14 pages in length. It’s not clear what timescale the regulator is giving itself to look at KFIs but it must be revisited soon.”
· To lend your support to MI’s ‘Get The Facts Straight’ campaign e-mail Dippy Singh at: [email protected]
