The Financial Services Authority will continue to monitor mortgage brokers’ financial promotions, having found little improvement in the number of promotions meeting regulatory standards.While sectors such as investment have upped their game, the FSA says sub-prime and equity release financial promotions are still not up to scratch. Common failings identified in relation to sub-prime brokers in-clude the omission of or incorrect calculation of APRs, lack of or inaccurate risk warnings and failure to disclose drawbacks associated with features described. The regulator also found several problems in the lifetime mortgage sector such as a failure to include potential drawbacks, APR and fee information. In contrast, lenders received a clean bill of health and the regulator says it does not intend to do any more work in this area. In its report the FSA states: “A major challenge is to improve the standard of promotions by smaller firms, particularly in the sub-prime mortgage market.” It adds: “We shall be focussing on repeat offenders, more serious breaches and those firms not showing sufficient awareness of the requirements imposed by regulation and, if necessary, taking formal enforcement action.” Terry Pritchard, managing director of Chase UK and long-time champion of standards in financial promotions, says: “It’s nice to see the FSA has noted what we’ve been saying for 18 months. “It should run specialist training courses for firms that don’t have compliance departments and re-fresher seminars for those that do. It should also conduct a review after six months and fine firms still not following the rules as at the moment it’s not a level playing field.” Payam Azadi, head of marketing at Mortgage Times, says this could encourage more directly authorised brokers to join networks. He adds: “Brokers are not ex-perts on financial promotions so they have only two choices – to buy in compliance assistance or join a network.”
A recent conversation with a friend who is considering buying nothing short of a wreck led me to think about mortgages for property renovation, especially as these deals are destined to become more popular in the coming years.
From Peter Sowerby In the week following the glimmer of common sense from the government in its withdrawal of Home Condition Reports from Home Information Packs I couldn’t help but laugh at the comments from the pro-HIP lobby trying to save their skins and future profits. No wonder the Association of Home Information Pack Providers […]
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