Proposals to remove the Initial Disclosure Document and change the use of the Key Facts Illustration will also apply to equity release sales.
The Financial Services Authority has previously discussed removing the compulsory requirement for firms to provide consumers with an IDD and replacing it with requirements for firms to disclose key messages to consumers.
And in its Mortgage Market Review distribution and disclosure paper, release today, it states: “We can therefore see a benefit in applying our disclosure proposals to equity release.
This would mean that consumers may no longer get an IDD but are given key information about the scope of a firm’s service and how the firm will be remunerated.
“As there are two distinct sectors in the equity release market – lifetime mortgages and Home Reversion plans – we would expect equity release advisers to disclose the scope of the service they offer in each market sector.”
The FSA says it will continue to work on the finer detail.
But generally says its IDD and KFI changes will bring the service disclosure requirements for mortgages more in line with those in the investment and insurance markets.
The report states: “Consumer groups were supportive of us making this change, though the response from firms was mixed, with many noting that their opinion would depend on what the key messages are.
Speaking at last week’s Mortgage Business Expo Shiela Nicoll, director of conducts policy at the FSA, says research has shown that in practice, the IDD has had little impact on consumer behaviour.
She says: “Further evidence has also shown that consumers do not use the KFI to shop around. They do however, value it as a record of their purchase and we have received strong support from both consumers and firms for retaining the KFI in its current form.
“So, while we do not propose to change the content of the KFI, we think that there may be value in removing some of the trigger points for the KFI to be provided to consumers. This should ensure maximum impact and avoid information overload.”