Obtaining key facts illustrations from lenders is the biggest single problem intermediaries face since the onset of regulation, according to a survey by the Association of Mortgage Intermediaries.
Ami says previous census results showed the majority of intermediaries welcomed mortgage regulation as a means of increasing standards but the recent survey shows key issues have yet to be resolved. Around 24% of respondents said obtaining KFIs from lenders was the most significant problem since regulation.
Nick Baxter, managing director of Mortgage Promotions, says research of their membership revealed only 39% of members obtain KFIs directly from a lender’s website while 59% obtain them from sourcing systems.
Baxter says the reason for the “surprising” results could be KFIs are difficult to get from lenders’ websites whereas sourcing systems provide the same format every time.
He says lenders need to change this because intermediaries would probably prefer to get KFIs from lenders’ websites if they were easy to use.
The size of KFIs continues to be a significant problem, according to Baxter, as 38% of lenders’ KFIs are 8-9 pages long while 12% are more than 12 pages long.
Baxter says: “Consumers can’t physically take in all the information. KFIs should not be more than four or five pages.”
He believes Financial Services Authority requirements on what information needs to be included in KFIs are too rigid because “there is information in there that doesn’t help the consumer”.
Baxter suggests the industry, particularly the AMI, should sit down with the FSA and work out what is sensible to include in KFIs so an overload of information can be avoided.
But, Ray Boulger, senior technical manager at Charcol, points out the compliance departments of many lenders want to make sure their “back is covered”.
He says lenders need to try and draw a line between what is important and what is not and the solution might be by making KFIs more personal to the consumer.
Boulger suggests sections which are identical in every KFI could be made into a separate, standardised document so consumers who shop around do not end up with numerous copies of the same information.
Another reason why KFIs appear long is the FSA says each section must be completed on a single page, says Boulger.
He explains the way some lenders’ systems are set up means 75-80% of a page is blank so the KFI looks long but does not necessarily contain a lot of words. Boulger says this is easy to fix because it is a simple matter of computer programming.
Boulger says lenders should look at those lenders who have managed to make their KFIs shorter and learn lessons from them.
On the other hand, Paul Fincham, senior media relations officer at Halifax, says the issue “is not as simplistic as saying the KFI should be a certain amount of pages” because certain products, such as step trackers, are more complicated and require more information.
Halifax has therefore not done a wholesale reduction of the amount of pages in their KFIs but has instead made “some tweaks and changes along the way”.
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
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created