Direct-only mortgages represent just 17% of the market, the regulator revealed last week.
In its Mortgage Market Review distribution and disclosure consultation paper, the Financial Services Authority claims that the number of direct-only products has reduced considerably – from 26% in November 2009 to 17% in November 2010.
Its figures show consumer loyalties are evenly split, with 50% going direct and 50% through a broker in Q2 2010.
But in a bid to encourage more brokers to recommend direct-only deals it is proposing that they do not need to issue a Key Facts Illustration on them. It wants to encourage firms to consider whether direct deals might be the best offering for their clients.
In the paper the FSA says: “The current rules get in the way of this because firms must provide a KFI when proposing a product and are liable for its accuracy.
“So we propose that where a firm other than the lender puts forward or recommends a direct deal, they will not be required to provide a KFI.
“Instead, the firm will be required to keep a record if they recommend a direct-only deal and provide the consumer with a copy of it in a durable medium.”
It adds that if a firm wants to call itself independent it will be required to tell consumers explicitly whether it will consider direct-only deals.
The FSA also suggests that where fees are rolled up two KFIs may need to be issued.
It has ruled out a ban on the roll-up of fees and charges as this would not be in the interest of consumers.
David Geale, acting sector leader for retail intermediaries and mort-gages at the FSA, says he does not have a timescale for implementing the proposals and does not want to rush matters.
He adds: “I don’t see anything in the paper that will necessarily lead to a reduction in the number of mortgage brokers. They have a strong role to play and this will continue.”