The Financial Services Authority has announced the second stage of its review of the effectiveness of the mortgage regime will focus on the sub-prime sector, where the risk of consumer detriment may be higher.
As well as reviewing sub-prime and lifetime mortgages, the FSA says it will look at whether consumers are taking out suitable and good value home loans and whether customers are treated fairly over the life of their mortgage, including if they go into arrears.
The review will include research to find out more about consumers’ experiences in the sectors of the market being covered, and will be supported by analysis of relevant market data and other FSA thematic work.
It will look at the FSA's five "intended consumer outcomes", focusing on areas with a higher risk of consumer detriment. The outcomes are:
- Consumers shop around for mortgages;
- Consumers understand whether they are being given advice or information by firms;
- Consumers better understand the risks and features of the mortgages they take out, including affordability risks;
- Consumers take out suitable and good value mortgages; and
- Consumers are treated fairly over the life of the mortgage, including when they go into arrears
The findings are likely to be published early next year and they will inform any next steps for developing the mortgage regime, which will also take into account the European Commission’s forthcoming white paper on mortgage credit.
The first stage of the review last year mainly concentrated on disclosure and advice and selling practices in the prime market, where the FSA found consumers were actively shopping around and key facts documents were helping them understand the risks and benefits of the mortgages they take out.
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 7034 2680 or email [email protected].IFAonline
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