The regulator has offered to work with mortgage firms in the industry to raise standards on this issue.
The FSA has written a letter to all mortgage lender CEOs, as revealed exclusively in the 14 May issue of MI – News and has published a factsheet for intermediaries following its review of mortgage disclosure documents. The letter and factsheet are available at www.fsa.gov.uk.
Clive Briault, FSA managing director retail markets, acknowledged the effort firms have made but said: “Some KFIs don’t contain all the required information and some include more information than the rules require, making them longer than necessary.”
He added: “We want to promote and reinforce a ‘less is more’ strategy to disclosure. Of the KFIs we reviewed, around half were five pages or fewer.
“Based on these findings, we consider that good practice for a standard mortgage would be no longer than five pages. However, we accept there may be exceptions for more complicated mortgages.”
Bill Warren, director of The Complete Network, said: “I’m pleased the FSA has moved so quickly. It is a good outcome for the intermediary but we have to hope that the ‘Dear CEO’ letters aid total consistency of content and a reduction in the size of KFIs.”
Tony Jones, managing director of Pink Home Loans, added: “It’s a positive step as the issue of KFIs needed to be addressed. It’s just a shame such clarity wasn’t shown pre-‘Mortgage Day’. It won’t be easy for lenders to sort out their systems and they will take time to adjust.”
Michael Coogan, director general of the Council of Mortgage Lenders, said it welcomed the FSA’s intention to promote a ‘less is more’ strategy to disclosure.
