press releases

Press Release - 02/11/04

MORTGAGE REGULATION NOW UNDER FSA REMIT - AND CONSUMERS SHOULD BE THE WINNERS, SAYS MONEYNET

AS the chief City watchdog the Financial Services Authority brings a substantial part of the UK mortgage market under its wing, financial data comparison service Moneynet.co.uk says that the greater transparency afforded by the new legislation should ultimately benefit consumers making the biggest purchase of their lives.

Previously regulated by Mortgage Code Compliance Board under a regime of voluntary self regulation, the new rules will from now affect the way that lenders and brokers deal with their customers.

Moneynet - which is itself fully FSA qualified to conduct business with its range of mortgage intermediaries - below details a quick reference guide to the key points of the new regulatory system as it will impact on consumers (1).

And chief executive Richard Brown said today that the new rulings should clarify many areas which were previously slanted in the lender/broker's favour.

"I welcome the new legislation, which should favour the consumer when making what is after all one of life's major purchases - buying a property.

"The FSA has in recent times demonstrated that it is a watchdog with real bite, as we have seen with the series of high profile fines it has handed down to companies found guilty of mis-selling or misleading consumers in the investment and independent financial advice industries.

"If it maintains this record of vigilance with the same tenacity in the mortgage industry then I believe we will see the benefits to consumers rapidly filter through."

Summary of new FSA regulations for mortgage brokers effective from 31 October 2003

- consumers will receive clear information about both mortgages and mortgage services. This will allow consumers to more easily shop around. They will be able to compare mortgages more easily, and understand what service they are getting (including any fees that will apply);

- small print cannot be used to hide important information;

- price information (including the APR) in any mortgage advertising and marketing material must be clear, and any advantageous features of products quoted in advertising must be balanced by a description of any associated drawbacks;

- where giving advice, firms must ensure they offer the consumer a suitable mortgage;

- both lenders and advisers have to consider the affordability of any mortgage that they identify for individual consumers;

- charges must not be excessive - and any charge imposed where the consumer either repays early or goes into arrears must be limited to a reasonable pre-estimate of the costs arising from the consumer's action;

- new standards apply ensuring the fair treatment of consumers in payment difficulties or facing repossession; and

- higher-risk mortgages - lifetime mortgages - will be subject to additional requirements - both on disclosure and on the training and competence of advisers.

- mortgage firms will have to meet FSA high level standards for authorisation including capital, approved persons and PII cover.

PRESS ENQUIRIES

Richard Brown, Chief Executive, 0208 313 9030

David Andrews/Cathy Tully, David Andrews Media Ltd 07941 255855 / 01273 774109 / 07747196854

Consumer enquiries: info@moneynet.co.uk / www.moneynet.co.uk

Moneynet.co.uk is the UK's longest established online personal finance research and data analyst company. The company offers consumers a choice of thousands of low cost financial services products. From mortgages, personal loans to motor, home and medical insurance, credit cards, savings accounts and best buy fixed rate products, Moneynet is one of the most comprehensive online services of its kind in the UK. Founded by chief executive Richard Brown, the Moneynet brand is destined to become one of the UK's major players in consumer finance products.

A DAVID ANDREWS MEDIA LTD - RELEASE FEBRUARY 2005