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FSA starts reviewing KFI length with major lenders

The Financial Services Authority has confirmed that it is conducting a review of Key Facts Illustrations, saying “less is more”.

In a speech at the annual conference for the Council of Mortgage Lenders’, Clive Briault, managing director of retail markets at the FSA, told delegates that the regulator had started to review examples of KFI documents to assess how the rules are being applied in practice.

He says: “Our initial focus has been on major mortgage lenders. The layout and clarity of most of these documents is good and we welcome the efforts these lenders have made.

“However, and as has been the subject of some discussion in the market, the length of these documents varies dramatically, from just over three pages to double figures. Of course, more complex products require greater explanation and thus a longer Key Facts document.

“But not all of the longer documents apply to more complex products. The problem with length is that it discourages consumers from reading the document and tends to obscure key information in unnecessary detail.

“This is an area where less is more and we are in discussions with some firms on how they can achieve this.”
Andy Barr, spokesman for Chelsea, says: “The point of regulation was to make it easier for customers, I don’t see the point of having a KFI that is so long. It seems to be going a bit wrong.

“It is understandable that KFIs for more complex products need to be a bit longer, but for a standard two-year fix, it doesn’t need to be any longer than five pages. Although it is a good thing the FSA is looking into KFIs, I think it should just allow the industry to make them shorter.”

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