|
FSA Regulatory Environment
From 31st October 2004, the Financial Services Authority (FSA) became responsible for regulating new mortgages that meet the following conditions when they are entered into:
- The borrower is an individual or trustee;
- The lender takes a first legal charge over property in the UK; and
- The property is at least 40% occupied by the borrower or by a member of his immediate family.
The conditions above mean that FSA regulation does not currently cover buy-to-let
mortgages (unless the tenant is a member of the borrower’s immediate family), second charge
loans or any loans to limited companies. Full details of this regulatory framework can be found in the
FSA handbook in the section on Mortgages: Conduct Of Business (MCOB)
Obligations on the Lender / Broker
The Key Facts Illustration (KFI) document is given to the borrower by the broker. The idea behind the KFI is to make clear the features, terms and conditions of the mortgage and so enable the borrower to compare different Lenders’ products on the same basis. It is personalised to the borrower and to the amount he / she wishes to borrow.
Among other things, the Key Facts Illustration will contain the overall cost of mortgage, how much the regular payments will be, what the initial interest rate is and what it will rise to after any special deal ends, whether there are any penalties after any special deal ends, whether there are any penalties for overpaying, and whether there are any conditional products that must be sought, such as insurance.
Further information can be found on the FSA website.
|
