View more on these topics


The FSA has published its consultation on proposals for regulating mortgage sales.

The consultation closes on November 11 2002. The paper is the first in a series of consultations, which will see mortgage sales regulated from around mid-2004.

Sarah Wilson, director of the high street firms division, says: “For many consumers, taking out a mortgage is one of the most significant financial commitments they will make in their lifetime.

“We want to make sure that consumers get clear comparable information on mortgages and that, where they get advice, they are recommended a suitable mortgage.

“We aim to introduce a regime that achieves this goal in a proportionate, cost-effective fashion.”

The FSA regime will regulate mortgage lending, mortgage administration, advising on a regulated mortgage contract and arranging a regulated mortgage contract.

Firms that will need authorisation include banks, building societies, specialist lenders and mortgage intermediaries.

Mortgages to be covered include loans that are taken out by an individual or trustee, and are a first legal charge on the borrower&#39s property. This property must be located in the UK and must be at least 40% occupied by the borrower or immediate family.

As well as mortgages for property purchase, the regime will cover other products where the security is a first charge over the borrower&#39s residential property, including home improvement loans, debt consolidation loans, lifetime mortgages and secured credit cards.

The regime will not cover second charge loans, most buy-to-let arrangements and loans to companies.

The key areas for regulation are:

Requirements on firms relating to the sales process whether they give advice or information – for example:

  • where they give advice, they would need to consider affordability and which mortgage(s) best meets the consumer&#39s needs and circumstances; and
  • where they give information and use filtering questions that narrow down the selection of mortgages, they would need to script the questions and make sure sales staff don&#39t stray over the boundary and give advice.

  • A second area is the provision of clear information about the mortgage itself in a prescribed order and layout so that consumers understand the terms of the mortgage and can compare it with others. This builds on proposals issued last year.
  • Proposals on fair treatment of consumers covering, for example, unfair sales practices and excessive charges.
  • Requirements relating to mortgage advertising and marketing material
  • Information that firms must disclose about themselves so that the consumer knows what service they will get and what fees if any the firm will charge.

    The FSA has also published a feedback statement on CP98 which contains near-final rules on some post-sale issues and a consumer research report on mortgages.

    Visit the FSA website at for more information.

  • Recommended

    A taxing problem

    From Dr Mark BlakeyRecent letters on buy-to-let propositions have debated some interesting fundamentals. Sohan Jheeta (Mortgage Strategy, July 1 2002) talks about interest on capital raised for commercial purposes being treated as an allowable expense that reduces the taxable income on rent received.What wasn&#39t mentioned though, and I would be interested to hear from others […]

    Platform offers new fix

    Platform Home Loans is launching a new range of market leading fixed rates starting from 4.99% and fixed until October 1 2003. The new fixed rates are: Up to 65% LTV = 4.99% Up to 75% LTV = 5.49% Up to 85% LTV = 5.99% Up to 95% LTV = 6.99%The fixed rates are available […]

    Authorisation, supervision, enforcement powers laid down

    The FSA has laid out its full framework of powers and responsibilities in Consultation Paper 146, detailing the process of how firms can register and, where appropriate, be punished. The FSA has already set out its plans for the authorisation process in the Authorisation Manual, which forms part of the FSA Handbook, and firms will […]

    Mortgages PLC enhances product range

    Mortgages PLC has announced major enhancements to its range of products, in particular those targeted at medium and heavy adverse borrowers. The changed products will be available from 19 August 2002. Highlights include: Initial pay rates from 5.00% 1.5% discount extended until October 31 2003 up to 90% LTV (1% on buy-to-let) Rate reductions on […]


    News and expert analysis straight to your inbox

    Sign up