The FSA has published results of the mystery-shopping undertaken on lenders and intermediaries in order to assess disclosure processes. During the course of the research FSA mystery shoppers conducted 82 mortgage interviews (62 face-to-face and 20 telephone-based). Those involved posed as genuine customers requesting re-mortgage quotations in April and May 2005.
The key objective for each interview was to see whether the firms provided the Initial Disclosure Document (IDD) and Key Facts Illustration (KFI) documents as required by the FSA rules. The top line findings show that in over 50% of assessments, firms failed to provide the appropriate documentation at the right time, and in one-third of the assessments firms did not provide one or both of the documents at all.
Commenting on the results Chris Cummings, Director General of AMI says: “Obviously we are disappointed by these findings and will look at the report as a whole. AMI has provided considerable practical support to its members, and highlighted the need for firms to have compliant disclosure procedures in place. We will review the FSA’s findings and offer further guidance to members who wish to seek greater clarity around the FSA’s regime.
“We would have liked the FSA to look at the quality of advice as well as the process, as this is undoubtedly the thing that matters most to consumers. It is worth underlining the fact that at no point does the regulator state that the advice given was inappropriate.
“However these are serious criticisms and, as they follow issues highlighted by earlier research on equity release, they should be seen as the final wake up call. It is not enough for firms to pay lip service to the compliance requirements of the regulator - they need to make sure that they are an integral part of daily practice. If we cannot sort these problems out it seems certain that tougher supervisory action will follow.”
