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FSA to act on selected proposals from Miles report

The Financial Services Authority will finally carry out some of the recommendations in the Miles report.

Professor David Miles’ report was largely seen as chancellor Gordon Brown’s attempt to find out if the UK was open to the US model of long-term fixed rate mortgages.

But UK consumers failed to find them attractive, and the report has largely been seen to have dropped off the political agenda. Unlike the Barker Review, where recommendations on increasing the UK’s property bank were welcomed, the Miles report was only briefly mentioned in the last Budget and had almost disappeared in last month’s pre-Budget report.

However, Professor Miles had other recommendations on issues that many in the mortgage industry were disappointed had not been acted on, such us the practice of lenders not offering the same rate to existing and new clients.

Clive Briault, managing director of retail markets at the FSA, confirmed last week at the Council of Mortgage Lenders’ annual conference that the FSA was acting on other aspects of the report.

He says: “Any changes we propose will be consulted on in the normal way. And we are committed to considering, in due course, Professor Miles’ recommendations on the use by lenders of cross-subsidy within their mortgage books.

“On financial capability, we have already reviewed our consumer education materials as part of the new regulatory regime for mortgages.

“On measures relating to the provision of advice and to the disclosures provided by firms to consumers, we are committed to starting a review of the effectiveness of the new regulatory regime by the end of 2005.”

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