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.
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More
About UK Mortgage Brokers and the new regulations
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.
