During the discussions brokers said they had little faith in the FSA’s guidelines on what constitutes ‘fair, clear and not misleading’ adverts.
One broker said: “Under the FSA’s rules the APR must be stipulated. But the APR is a discredited vehicle and for someone who’s on a two or three-year deal the APR could be misleading.
“Also, we are told we have to put in our promotions the fees we charge. But this is pre-judging that you are going to charge a fee. How do we know if we will be charging a fee? You may decide not to charge anything. And we can’t put down our typical charges as this would be deemed as misleading.”
The FSA responded by saying that at the moment the APR is the best indicator the market has to determine the overall cost of the credit. It added that if brokers do not know the fees they will charge clients then they should put down a representative fee. It said: “There is some leeway given in these circumstances.”
Julian Wells, head of marketing at Mortgages plc, said: “These brokers have a point. The APR rule is ridiculous. The fact is nobody has a mortgage for 25 years. Calculating it on a five-year basis would make more sense.
“But the FSA is trying to create a balanced view within the promotions. You can’t just promote the good things about a product.
“Brokers can use a representative fee but they can’t just quote their cheapest fees in their adverts.”
