Mortgage literature still needs more improvement, the FSA says

A survey by the regulator found that more than a quarter gave out key facts illustrations (KFIs) to their customers that contained significant mistakes.

However, the FSA said that overall the quality of mortgage information had improved during the last year.

Large lenders accounting for 75% of new mortgages had made progress, it said.

The regulator said their improvement applied to both KFIs and initial disclosure documents (IDDs), which all lenders or brokers are now obliged to give to potential customers.

Clive Briault, the FSA's managing director of retail business, welcomed the progress in improving the quality of mortgage documentation.

"Providing consumers with clear and relevant information is a key element in consumer protection, because it enables them to make informed decisions and to shop around," he said.

"But this review and other areas of our work have found that some firms are still not doing enough to meet our disclosure standards."

Customer information

The survey was carried out by examining the literature of a sample of 100 lenders and brokers, and by talking to the firms involved.

Last year's survey, based on a mystery shopping exercise, had found a particularly poor state of affairs, with lenders and brokers routinely breaking the rules.

As well as continuing problems with KFIs, this latest survey found that half of the IDDs published by brokers still had five or more errors in them.

The FSA said that was inadequate - even though it was an improvement on last year's survey, which found an error rate of 80%.

Last October, the regulator launched its own web site to give the public general advice on mortgages.

Its research had found that many people could not understand how mortgages worked and were baffled by the jargon in the lenders' literature.

Lenders and brokers have been obliged to supply customers with standard information since the FSA took over mortgage regulation in 2004.

IDDs tell customers if they will receive advice or just information, what policies are on offer and if they will be charged by a commission or an upfront fee.