The regulator found consumers are actively shopping around for their mortgages and consumers who receive Key Facts documents from mortgage firms can understand the risks and features of the mortgages they take out.
The main focus of the review was on pre-sale disclosures and firms’ advice and selling standards to establish whether the FSA’s conduct of business rules were delivering the intended benefits for consumers.
The review identified that over 75 per cent of consumers shop around for their mortgage. Consumers are also using the Key Facts Illustration (KFI) in a number of ways – including: to compare mortgages; to consider the risks of mortgage products; and to decide if a mortgage is right for them.
Dan Waters, director of retail policy division at the FSA, said: "The review so far suggests things are moving in the right direction, although changes to consumer behaviour are likely to happen only gradually. Mortgage regulation is still relatively new and we have planned the effectiveness review in stages to identify trends and measure progress against the intended outcomes over time.
"These findings also confirm the importance of firms giving out Key Facts disclosure documents to their customers as our rules require. Well-informed consumers are essential for a competitive market, and Key Facts documents are designed to be clear, fair and not misleading and to help consumers shop around to get a good deal."
The next stage of the review, to be carried out next year, will focus on parts of the mortgage market where the FSA believes there is more likely to be consumer detriment including lifetime mortgages and the non-conforming market. It will also will look further at whether consumers are taking out suitable and good value mortgages and whether they are treated fairly over the life of the mortgage, including when they go into arrears.
