60% Of brokers see costs jump due to FSA control

A full 60% of intermediaries have seen their costs increase by more than 10% due to regulation, research by the Intermediary Mortgage Lenders Association reveals.

The research among the intermediaries that provide IMLA members with most of their mortgage business also shows 72% of intermediaries feel regulation has brought no benefits to customers.

These findings support IMLA’s earlier research which showed mortgage regulation can’t be justified on a cost-benefit basis.

The latest research says 60% of mortgage customers obtain only one or two Key Facts Illustrations, with the average being 2.3.

Over 40% of brokers believe clients don’t read KFIs properly and 60% believe they don’t understand the various components. Nearly 70% of brokers think clients don’t use KFIs to compare products and 68% don’t think they get better advice as a result of regulation.

The research also highlights the attitude of intermediaries towards packaging, an area where confusion still reigns. Most, 67%, think all packagers should be regulated.

Tim Dawson, chairman of IMLA, says: “It is becoming clear despite the enormous time and costs to lenders, intermediaries and customers, statutory regulation has not achieved its main objectives.

“The research also shows most intermediaries would like to see regulation simplified, with much less paperwork. MCOB runs to 483 pages so we see this as quite a challenge.

“The Financial Services Authority should take the opportunity next year to work closely with professional bodies to review how the regulatory framework can be simplified to deliver benefits to the consumer in a cost-effective way.”

Robin Gordon-Walker, spokesman for the FSA, says: “We have seen the IMLA report. As has been stated, we will be starting a review of the effectiveness of the mortgage regulation regime at the end of 2005. We are keen to work with trade bodies such as IMLA as part of this work.”