The Financial Services Authority has announced that the second stage of its review of the effectiveness of its mortgage regime will focus on areas where the risk of consumer detriment may be higher, such as sub-prime and lifetime mortgages.
It will also look at whether consumers are taking out suitable and good value home loans and whether customers are treated fairly over the life of their mortgage, including if they go into arrears.
The findings of the review will influence FSA thinking about their intended move to a less prescriptive Principles based approach to mortgage rules.
The FSA aims to have finalised the review by the end of 2007 and the research will be undertaken in part by research agencies. The findings will be published during the first quarter of 2008.
The purpose of the review is to also assess the effectiveness of the MCOB rules against the intended consumer outcomes:
Outcome 1: Consumers shop around for mortgages;
Outcome 2: Consumers understand whether they are being given advice or information by firms;
Outcome 3: Consumers better understand the risks and features of the mortgages they take out, including affordability risks;
Outcome 4: Consumers take out suitable and good value mortgages;
Outcome 5: Consumers are treated fairly over the life of the mortgage, including when they go into arrears.
