The exercise is part of the regulator’s assessment of emerging retail market and product risks.
Material on its website, entitled “Identifying and responding to emerging retail risks”, is the first time the FSA has been transparent about how it identifies potential issues and the areas it is currently focusing on.
Following Mortgage Introducer’s ‘Get The Facts Straight’ campaign, The FSA has said ensuring the IDDs and KFIs are clear and accurate is one of its key priorities.
It is conducting a desk-based review of these disclosure documents from a sample of firms from across the mortgage industry to assess their quality.
Anna Bradley, consumer sector leader at the FSA, said: “This risk identification work is all about being on the front foot; protecting consumers by identifying the issues today that could become problems tomorrow.”
The FSA will also be assessing sales of payment protection insurance (PPI) over the coming year.
It will focus on firms’ compliance with the rules, in particular on selling practices and the information provided to customers, and will cover a broad range of intermediaries and providers.
In addition its examination of financial promotions produced by mainstream lenders, equity release providers and brokers, non-conforming lenders and brokers is already underway.
Kevin Morgan, managing director of Consilium Financial Planning, commented: “This mystery shopping has to be seen as a good thing as it will make sure advisers are doing what needs to be done. And it’s more cost-effective than doing site visits.”
