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The new UK Mortgage regulations – an overview

On 31 October 2004 the Financial Services Authority (FSA), a governmental body, took over the regulation of most mortgage sales.

The key changes are that by law you will now get – to quote the FSA:

“…clear information about mortgages… in a standard keyfacts format. This makes it easier for you to compare mortgages and services from different lenders…

…price information (including the APR) in any advertising must be clear…

…when you receive advice… [the broker] must make sure that they recommend a suitable mortgage based on your needs and circumstances…

…charges must not be excessive…
and…there are new standards offering greater protection should you get into arrears with your mortgage..”

All this is to be greatly welcomed.

However what isn’t so great is the FSA’s new animal - the multi tied adviser.

This is seen as being bad for consumer choice. It will add to the confusion.

Until the change in the regulations you could get financial advice in two ways: through an IFA – who could recommend any mortgage on the market to you, or a tied broker, who could only recommend one lender’s mortgages.

This approach was called polarisation.

However depolarisation, has introduced a third type: the multi-tied adviser. Consumers now have more difficulty working out which type of broker is best for them.

The way to do this is to check the key facts document– which you should be given at the first meeting with the broker. This explains what type of advice is being offered, and sets out the charges. See The Keyfacts and Initial Disclosure Documents

However the experts are questioning whether most people will bother to look through all this extra information.

As with so many financial documents they can look so complex that people won’t get round to reading them.

Some professionals feel the reason the FSA has done this is because they want to get rid of the independent small practitioners and only deal with big firms. That might be good for the FSA - easier to regulate and all that - but, if true, it is very bad news for consumers.

It is the, independent sole traders who often have the most experience and will get you the best deal. These guys are usually older, wiser - often ex Building Society or retired from other senior posts - and preferable to the pimply youths and youthettes employed by the big firms. To them all you signify is a sales target they are being "motivated" to acheive by their venal management.

To make sure you are getting the best deal regardless of what type of broker you are dealing with always SHOP AROUND. Get more than one quote. Ask different brokers.

Let the best one win your business.



To read more on this subject please see the list below or your mortgage guide or your home buying guide

Read enough? Just want a quote? To get your best mortgage quote quickly and easily we can put you in contact with a recommended mortgage adviser. It's free, completely confidential and there's no obligation at all. Simply fill out the form below

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The FSA, or Financial Services Authority, is a UK government body that implements regulations covering most financial companies, including all UK mortgage lenders. UK mortgages are covered by the new FSA regulations which came into force in October 2004. One of the main benefits of the new FSA regulations is that you are legally entitled to fair, impartial information about the mortgage products you are considering. This makes it easy to compare different UK mortgages to see which is best for you.

People looking for UK mortgages should generally be happy with the new FSA regulations, as they mostly exist to ensure everyone gets the best mortgage for their situation. This page contains more details about the new FSA regulations and how they affect people looking for mortgages in the UK. It includes a note about the different types of mortgage advisor – it is worth reading this if you are looking for a UK mortgage as you need to understand what type of mortgage advisor you are looking for. Remember that all types of UK mortgage advisor are covered by the new FSA regulations.



 

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