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Treasury won’t rule out review of mortgage products

The Treasury has not ruled out a consultation on simplifying mortgage products as it launches a review of life insurance and income protection.

The Financial Secretary to the Treasury Mark Hoban is publishing a consultation document on Simple Financial Products today.

A spokesman for the Treasury says: “The consultation doesn’t include mortgage products but we haven’t ruled it out in the future so it’s watch this space.”

The consultation sets out proposals for financial products that will help promote personal responsibility, enable consumers to compare products and understand product features more clearly.

Hoban says the consultation is one of a series of reforms to help consumers get a better deal from financial services.

He says: “The government is committed to helping consumers take responsibility for their finances. In order to do this they need to be able to make sense of the huge range of financial products in the market.

“Simple financial products will help them to do that, by providing a safe choice and a common benchmark against which other products can be compared.

The Treasury says the proposals will also help to encourage competition between providers.

The consultation proposes industry and consumer-led development of a new category of simple financial products, with standardised features.

These include that the first simple products to be developed should be deposit savings and life and income protection insurance products.

And that simple products should not be subject to price-caps, and provision should be voluntary.

The government is now seeking input from consumer groups, the financial services industry, and other interested parties, to develop simple products further.



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  • Gray Haired Underwriter 17th December 2010 at 9:39 am

    @ Anon 11.35. Sorry but based on my experience your argument is flawed. Intelligence has nothing to do with whether a borrower will be good or bad. In fact some of the most intelligent people have no common sense and more than their fair share of credit card debt. In fact I would go as far as to say that those you are targetting with your comments will work extremely hard to make their mortgage work because they are not quite so used to getting something for nothing. RTB is an interesting example because I doubt that there are any greater arrears from this sector than there are from any other – although shared ownership stats suggest that this can be higher risk.

    I do, however, know exactly what you are saying as there are a number of borrowers who really don’t think that a lender will take them into possession and make them homeless but I am dubious as to whether you can simplistically categorise them based on a low IQ.

    It is anm interesting debate that has in my experience cropped up regularly amongst lenders. Lucky that we can keep an open mind about these things though or otherwise we wrongly discriminate against otherwise good borrowers

  • sarah smith 16th December 2010 at 11:35 am

    @Gray Haired underwriter: In all serious yes, an IQ test wouldn’t necessarily be a bad thing. Whilst there is of course issues with social exclusion etc, we have seen massive mis-selling of RTB loans to people who should never have had them. The biggest customer base for Mortgage Rescue are former tenants who exercised RTB. So whilst i wouldn’t use your terminology of ‘thick’ those less financially astute need to think carefully about what they’re doing so making things easier or simplier is not the answer.

    Any yes if as a by product it gets rid of some questionable advisors (including lender advisors) I don’t think its a bad thing!

    PS whilst I have to submit anon due to company policy I will confirm I am a lender employee.

  • Gray Haired Underwriter 16th December 2010 at 10:26 am

    @ anon 10.12. Are you suggesting that some people are just too ‘thick’ to be allowed to have a mortgage? If that’s the case will I have to have the results of an IQ test before I agree a loan? It would certainly take a lot of so called professionals out of the mortgage market.

  • sarah smith 16th December 2010 at 10:12 am

    Should a mortgage really be simple? Its the biggest financial commitment you will enter into, therefore surely making it a little bit complicated stops less financially astutue people entering into something they can’t handle?

  • Paul Rawson 16th December 2010 at 9:56 am

    Like Mary the first thing that jumped to my mind was the CAT standard mortgages. This is a really easy problem to fix. Stop insisting on 6/7 page documents that only serve to confuse the average consumer. Simplify to increase understanding. Anyone else had a client chose a more expensive fixed rate (based on the fixed rate period) because the total cost of borrowing was higher? How can you compare svr to base tracker anyway? What are the chances of a rate staying the same for 25 years? And before anyone asks, yes the clients have this explained to them but some just see the numbers. Do they ever consult frontline advisers on these things? I’d even volunteer to help.

  • Steven Balmer 14th December 2010 at 7:26 pm

    This is a simple way of saying lets make products for the bank staff to sell which they might stop cocking up, its embarrassing to be dealing with these complaints stats while trying to vilify advisors at the same time. What about simplifying overseas tax havens as he has mandated to do? i.e. cut them out and start getting a fairer tax system for the whole of the country to benefit from and not just his elitist co-conspirators?

  • Mary Lockyer 14th December 2010 at 4:32 pm

    Oh dear, they have forgotten the “CAT” standard mortgage, that no one seemed to want, how simple do they mean? the last thing the industry needs is stifling of innovation. There is a need for diversity of products, as some need the security of fixed rates, others don’t, some can take advantage of offsetting, etc etc, suitabilty and clarity of terms yes, meddling and the bungling nanny state NO