Pre-application illustrations here to stay

The FSA&#39s consultation on regulating mortgage sales confirms that controversial pre-application illustrations are here to stay.

The need for a personalised PAI for each mortgage applicant was originally proposed in CP98. In its latest CP146 consultation, the FSA says: “We consider that the principle behind this approach to product disclosure still applies.

“This is that consumers need to be provided with product information at an early stage in the process, in a consistent format, to help them compare and contrast different products &#45 and thereby facilitate shopping around.”

The FSA proposes a number of changes to PAI content to reflect the extension of the regulatory regime to include advice and arranging and mock-up PAIs drafted by 14 lenders and two intermediary firms.

CP146 includes an eight-page PAI template for consultation.

The FSA has made some concessions after PAI proposals were criticised in feedback to CP98 for producing additional paperwork. For instance, firms will only have to produce a PAI for a repayment mortgage when a customer expresses no preference between repayment and interest-only vehicles.

The FSA will back up its product disclosure requirements with comparative tables for mortgages &#45 due to go live in October 2002.