On 31 October 2004 the Financial Services Authority (FSA), a governmental body, took over the regulation of most mortgage sales. This ended an era when anybody – even people with convictions for fraud – could trade as a mortgage adviser. (Note since the FSA closed it’s responsibilities re mortgage brokers have been taken over by the Financial Conduct Authority. However the information below otherwise remains valid)

The key changes were that by law you now get – to quote the FSA:

“…clear information about mortgages… in a standard keyfacts format. This makes it easier for you to compare mortgages and services from different lenders…

…price information (including the APR) in any advertising must be clear…

…when you receive advice… [the broker] must make sure that they recommend a suitable mortgage based on your needs and circumstances…

…charges must not be excessive…
and…there are new standards offering greater protection should you get into arrears with your mortgage..”

All this was greatly welcomed at the time.

However what wasn’t so great was the arrival of the FCA’s new animal – the multi tied adviser.

This is seen as being bad for consumer choice. It adds to the confusion.

Until the change in the regulations you could get financial advice in two ways: through an IFA – who could recommend any mortgage on the market to you, or a tied broker, who could only recommend one lender’s mortgages.

This approach was called polarisation.

However depolarisation, has introduced a third type: the multi-tied adviser. Consumers now have more difficulty working out which type of broker is best for them.

The way to do this is to check the key facts document– which you should be given at the first meetingwith the broker. This explains what type of advice is being offered, and sets out the charges. See The Keyfacts and Initial Disclosure Documents

However the experts are questioning whether most people will bother to look through all this extra information.

As with so many financial documents they can look so complex that people won’t get round to reading them.

Some professionals feel the reason the FCA did this was because they wanted to get rid of the independent small practitioners and only deal with big firms. The theory being that the FCA assumed it would be easier to regulate larger firms – a terrible mistake as we now know, thanks to the banking disasters of 2008 onwards. In any event it was bad news for consumers.

It is the, independent sole traders who often have the most experience and will get you the best deal. These guys are usually older, wiser – often ex Building Society or retired from other senior posts – and preferable to the pimply youths and youthettes employed by the big firms. To them all you signify is a sales target they are being “motivated” to acheive by their venal management.

To make sure you are getting the best deal regardless of what type of broker you are dealing with always SHOP AROUND. Get more than one quote. Ask different brokers.

Let the best one win your business.

To read more on this subject please see the list below or your mortgage guide or your home buying guide

More About UK Mortgage Brokers and UK Regulations