It says it wants to encourage firms to consider whether any of these deals might be the best offering for their consumers, even if they cannot provide the product themselves.
In the paper it says: “The current rules get in the way of this, because firms must provide a KFI when proposing a product and are liable for its accuracy.
“So we propose that where a firm other than the actual lender puts forward or recommends a direct-only deal, they will not be required to provide a KFI. Instead, the firm will be required to keep a record where they recommend a direct-only deal and provide the consumer with a copy of that record in a durable medium.
“The record can take the form of a KFI, but it does not need to. As there will no longer be a regulatory requirement on the firm to produce a KFI, it will not have responsibility for the KFI’s accuracy.”
It says the record need only contain the fact that the firm has recommended that the consumer take out the specific product concerned.
The consumer should get a complete and accurate KFI about the product from the lender.
June 2009 was the first time since 2005 that more people bought their mortgages direct than through intermediaries.
The FSA says since then the market seems to have stabilised,with an equal share of consumers purchasing directly as through an intermediary products that are only available direct from a lender has reduced quite considerably – from 26% in November 2009 to 17% in November 2010.
Despite this reduction, the number of products available direct means that consumers using an intermediary may, depending on that intermediary’s approach, be unaware of a number of mortgage deals that could be appropriate for them.
It says: “We propose to specify that a firm’s search does not need to extend to these products in order to use the label ‘independent’.
’In practice, as currently, a firm may use a panel of lenders in meeting the requirement for a comprehensive and fair analysis of the market, but the panel would need to be sufficiently large to ensure it is representative of the range of products available.
“To be ‘independent’ firms will also be required to offer an unbiased and unrestricted service. This means they should not be bound by any form of agreement with a lender that restricts the service they can provide.
“Where a firm does not meet these requirements, it must describe its service as restricted. In doing so, it will need to clarify whether it offers products from just one firm or a limited number of firms, and note any restrictions on the range available.”