Watchdog probe into mortgages

PEOPLE taking out mortgages should be able to get 'clear comparable information' if proposals put forward by the City's watchdog go ahead. The Financial Services Authority said that following the Treasury's decision in December to extend its powers to include mortgage advice, it was consulting on proposals for regulating mortgage sales.

During its three-month consultation period on the subject, the FSA will seek comments from industry and consumer bodies, and the general public. The new regime is expected to come into force in mid-2004, to coincide with the introduction of general insurance regulation.

Sarah Wilson, director of the FSA's High Street firms division, said: 'For many consumers, taking out a mortgage is one of the most significant financial commitments they will make in their lifetime. We want to make sure that consumers get clear comparable information on mortgages and that where they get advice they are recommended a suitable mortgage.'

An FSA spokeswoman said: 'What we are trying to do is encourage people to shop around, and where people are getting advice we want to make sure they get good value and suitable advice.'

The new regime will cover mortgages which are taken out by an individual or trustee, but not most buy-to-let mortgages or loans to companies.

The key areas covered by the proposals will include:

Requiring firms which give advice to consider affordability and which mortgage best meets the consumer's needs.

Provision of clear information about the mortgage in a prescribed order and layout so consumers understand the terms and can compare it with others.

Proposals on fair treatment of consumers, for example covering unfair sales practices and excessive charges.

Requirements relating to mortgage advertising and marketing material.

Information that firms must disclose about themselves so the consumer knows what service they will get and what fees if any the firm will charge.