Small and medium-sized mortgage firms are still not meeting the Financial Services Authority's disclosure standards.
The FSA’s latest review of mortgage disclosure documents reveals more than 25% of the key facts illustrations (Kfis) issued by small and medium-sized intermediaries and small lenders still contain material errors relating to fees and charges.
In addition, more than half of the intermediary initial disclosure documents (Idds) reviewed contain five or more errors.
The FSA says although this is an improvement on the 80% figure in the 2005 review it is still “inadequate”.
Meanwhile, the large mortgage lenders in the sample – who account for around three-quarters of total mortgage lending in the UK – have made good progress in improving their Idds and Kfis and are on course to meet the required standard by autumn, says the regulator.
It adds the small lenders in the sample produced Idds of an “adequate” standard.
The review follows a similar exercise conducted last year, which identified variable quality and widespread inaccuracies in the mortgage disclosure documents reviewed.
The FSA subsequently gave feedback to the chief executives of mortgage lenders and published a factsheet to help intermediaries achieve a better standard of documentation.
Further work by the FSA will involve following up particular concerns with firms and developing website material to include examples of actual errors made to help firms avoid these in future.
Small mortgage intermediary firms visiting FSA regional roadshows can have their Idd reviewed to help them identify any key areas of non-compliance and potential confusion for consumers.
Clive Briault, managing director of retail business at the FSA, says: “I welcome the encouraging progress made over the past year in raising the quality of mortgage information provided to customers. But this review and other areas of our work have found that some firms are still not doing enough to meet our disclosure standards.”
John Howard, chairman of the Financial Services Consumer Panel, adds: "We have been disappointed that many firms have not responded more quickly to the straightforward requirements in the FSA rules. This means that consumers are being poorly treated in too many cases. The FSA needs to keep a close watch on how firms respond to its latest initiatives."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
Staying invested could prove lucrative
Consider lasting powers of attorney
Less environment, more governance threatens to undermine firms' green credentials
Evidence your compliance