Speaking at the Council of Mortgage Lenders’ (CML) Annual Conference this week McCarthy explained the FSA has just started a review into the effectiveness of the mortgage regime. He highlighted disclosure requirements, and advice and selling practices as areas it will look to undertake early consumer research on.
He said: “We will also be using various other regulatory tools to test the effectiveness of the regime ranging from the analysis of statistical information to conducting mystery shopping.
“Specific areas to be targeted include small firms using internet Financial Promotions for non-conforming lending as many websites were found not to be compliant even with basic requirements and a follow-up into the quality of disclosure documentation which is an area where real improvement is needed.”
The FSA has also highlighted lifetime mortgages as an area of concern and it will be conducting a further round of visits over the coming months and more mystery shopping. The non-conforming sector can also expect further attention. Lenders in this sector face further discovery work into inappropriate costs in the calculation of early repayment charges.
The speech comes on the back of the FSA publishing a ‘Better Regulation Action Plan’ aimed at moving the balance of financial services regulation towards high-level principles rather than detailed rules and guidance.
John Tiner, chief executive of the FSA, said: “A shift towards a more principle-based approach will take time to implement as much care will be needed to ensure we retain rules that clearly add value in maintaining efficient, orderly and fair markets, and helping consumers secure
a fair deal.”
Bill Warren, director of The Complete Network, said: “At the moment I think brokers are still fearful of the FSA and although there should be an element of this, it is important trust is built up between the two. These rules should help to do this.”
