From Jonathan Cornell
CP146 represents the FSA's current stance towards mortgage regulation. The mortgage industry seems to be the last major industry within financial services that is not officially regulated. Until now it has slipped through the grasp of the FSA and the mortgage industry has sought to regulate itself through the Mortgage Code.
While I welcome any legislation that helps ensure that consumers are protected, it is hard to see how the 353 pages of this document take us beyond the existing Mortgage Code.
The main content of this paper seems to be the huge amount of information that the customer needs to be supplied with pre-sale. While I wholeheartedly agree that customers need to be informed, I feel that they are in danger of sufferning an information overload. It advocates the post-sale suitability letter required by the Mortgage Code should be dropped as the FSA feels that consumers might read this but fail to read the pre-application illustration and mortgage offer. Why is this letter required by the FSA for investment business then? I feel that a document such as the life and pensions industries key features document would help pre-sale. Keep it simple! Don't confuse them!
As part of this pre-sale information it advocates comparative tables, however, while within the pensions or investment business it may be possible to compare like-for-like products, I don't think this is useful for a consumer as each consumer will have different needs, such as LTV, self-certification, speed of transaction and such.
And there seems to be at least one glaring absence from this paper – buy-to-let mortgages are not covered. Only mortgages where the property is at least 40% occupied by the borrower or members of his immediate family are covered. So if you buy a house to live in, you are covered, but if you buy a house to let out, you are not.
Essentially, the more we put into this consultation, the more it will help us and our clients.
Hamptons International Mortgages