Financial and Mortgage firms need to brace themselves, now that the city watchdog has issued a warning, ordering them to provide clear and precise information to customers regarding their policy rules and regulations.
Watchdog, Financial Services Authority (FSA) has told mortgage firms and brokers to be more cautious while providing particulars to their customers about their products. They ought to ensure that customers were clearly and adequately intimated about the details of the loans or mortgages lent to them.
The FSA stated that the Key Facts Illustration (KFI) documents supplied by lenders since last November were extremely ambiguous and often shrouded in incomprehensible legal terminology that was seldom understood by borrowers.
The FSA reviewed about 150 KFI documents and found that more than 50% of the KFIs were unnecessarily lengthy, extending to more than 5 pages, and thereby concealing all important facts required to be known to customers. It, thereafter, sent out a notice to such firms, demanding for immediate modifications to their KFIs.
Clive Briault, FSA managing director of retail markets informed, “We have found cases where documents were not in line with the format and content required by our rules or were too long and written in overly-legalistic language. Some Key Facts documents do not contain all the required information, and some include more information than the rules require, making them longer than necessary. We want to promote and reinforce a 'less is more' strategy to disclosure.”
The watchdog further alerted lenders that if alterations in the KFI boxes were not effected soon, it would be compelled to take stringent action against them.
Meanwhile, the Council of Mortgage Lenders lashed back at the FSA and alleged that they furnished customers with long and detailed documents only to spare themselves from FSA’s rod.
Posted
on : Fri, 20 May 2005 06:55 GMT | Mortgages News
By : Anne Philips
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