As part of the second phase of its review of the effectiveness of its mortgage regime, the UK Financial Services Authority has confirmed that it is to focus on areas where the risk of consumer detriment may be higher, such as sub-prime and lifetime mortgages.
Furthermore, the regulatory body will also investigate whether consumers are taking out appropriate and good value home loans and whether customers are treated fairly over the life of their mortgage, including if they go into their arrears.
The second stage of the review will also involve consumer research to find out more about consumers’ experience in the sectors of the market being covered.
The first phase of the review was applied last year, which primarily focused on disclosure and advice and selling practices in the mainstream mortgage market, where the Financial Services Authority (FSA) discovered that activities were moving in the right direction, with customers actively shopping around, and appropriate documents were supplied to help them to understand the risks and benefits of the mortgages they take out.
The FSA expects to complete the second stage of the review by the end of 2007.