LONDON - The Financial Services Authority has said that it will be undertaking a major review of the way the mortgage market has benefited form its regulation. The City watchdog had started regulating the mortgage market from October 31 last year.
The main aim of regulating the market was to make it easier for harried consumers to be able to choose the right mortgage plans for themselves. However, this has not happened and bad advice continues to be given and the consumer is no safer that what he was a year ago.
The FSA set some standards for 4,500 authorized mortgage firms and 170 lenders. Consumers also had the right to get their complaints heard by the Financial Ombudsman Service whenever things went badly. But the FSA has faced flak for the way it has regulated the market.
“Most firms are very much trying to engage with regulation but it is a difficult job for some, because this is a new area for them,” said Stephen Bland, the FSA official charged with delivering regulation. “There are a few high risk areas where we really do need to do more with the industry to make sure standards are raised.” Bland said that the first year had delivered 'mixed' results.
This was brought home when a mystery shopping exercise by the FSA revealed that 55 percent of the firms were not complying with the new rules. Bland said that the FSA’s review of mortgage regulation in December would largely be focused on document disclosure. “We needed to give the market time to bed down, but we will be asking ‘are we achieving the benefits for consumer that we wanted?’” he said.
The Council of Mortgage Lenders, which represents 150 lenders, said that even though there were teething problems the regulations were needed. But the costs were way above estimates. "Before statutory regulation came in, the FSA estimated that one-off set-up costs would total £83m for lenders, with total annual costs of just under £68m," said the CML. "In practice, lenders' transitional costs were likely to have been well over double the FSA's original estimate."
Posted
on : Sun, 30 Oct 2005 14:05 GMT | Mortgages News
By : Mark Richardson
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