The mortgage regime is now complete and firms have a full year in which to prepare for the start of regulation on 31 October 2004.
The FSA’s mortgage regime is designed to deliver better protection for consumers over the entire life of their mortgage. As with other FSA consumer protection measures, it is based on the principle that firms must treat their customers fairly. Measures firms will have to take include:
- providing consumers with clear, comparable information about the service they are receiving and the mortgage itself. This will make it easier for consumers to shop around and make an informed decision;
- when giving advice, identifying the mortgage which best fits their customers' needs;
- considering a consumer’s ability to repay a loan before entering into a contract;
- meeting new standards for dealing with consumers who are in arrears or facing repossession. This includes sending these consumers a new FSA information sheet explaining what their options are if they can't meet their mortgage payment; and
- meeting additional requirements where they are giving advice on lifetime mortgages, which the FSA considers to be higher risk. This includes providing consumers with tailored information about the costs and risks involved in taking out a lifetime mortgage.
FSA Director Sarah Wilson said:
“The mortgage regime is now complete. Now it’s time for firms to decide what they want to do about regulation.
“They have two choices - to become directly authorised by the FSA or to become an appointed representative of an authorised firm. Whatever route firms take, they will have to meet our standards.
“Regulation is just a year away. Firms need to start their preparation now. From November firms will be able to register for an application form online or by phone. A website (www.fsa.gov.uk/mgi/) with information on authorisation is already in place and, from early November, we will launch our contact centre and begin a programme of workshops around the country. So there will be plenty of help available for firms.
"We will start accepting applications from mid-January. Firms are advised to apply early and electronically. Firms that leave it to the last minute may well find that there are many others who have done the same thing and the FSA cannot guarantee that latecomers will get through the door in time."
Final rules are published today at www.fsa.gov.uk/pubs/handbook/hb_notice26.pdf. The policy statement highlighting the changes made in response to CP186 will be published by the end of the month.
