Over 25% of small and medium firms’ Key Facts Illustrations are not up to scratch and still contain errors relating to fees and charges, says the Financial Services Authority.
Although large lenders, who account for three quarters of total mortgage lending in the UK, have been praised for making good progress in taking steps to improve the quality of both their Initial Disclosure Documents and Key Facts Illustrations, the FSA says firms at the bottom of the scale must do better.
The small lenders in the sample produced IDDs of an adequate standard.
And more than half of the intermediary IDDs reviewed contained five or more errors, although an improvement on the 80% figure in the 2005 review, the FSA says this is still inadequate.
Clive Briault, managing director of retail business at the FSA, says: I welcome the encouraging progress made over the past year in raising the quality of mortgage information provided to customers.
Providing consumers with clear and relevant information is a key element in consumer protection because it enables them to make informed decisions and to shop around.
But this review and other areas of our work have found that some firms are still not doing enough to meet our disclosure standards.
We will continue to press for these standards to be met, by following up shortcomings with individual firms and by working with the industry.”
The 2006 review followed a similar exercise conducted last year which identified variable quality and widespread inaccuracies in the mortgage disclosure documents reviewed.
The FSA subsequently gave feedback to the chief executives of mortgage lenders and published a factsheet to help intermediaries achieve a better standard of documentation.
The FSA’s work focussed on the breaches it considered to have the greatest potential for consumer detriment.
Under the FSA principles a firm is required to pay due regard to the information needs of its customers, and communicate information to them in a way which is clear, fair and not misleading.