UK Mortgage Regulations
As of October 31, 2004, a new era in British mortgage industry began with the institution of UK mortgage regulations by the Financial Services Authority (FSA).
Previously, the UK mortgage industry was notable for its lack of regulation. This allowed for great diversification and competition among lenders, ideally creating a variety of options for consumers. In truth, the recent FSA regulations have done little to affect the positive qualities inherent in the modern British mortgage system. The new UK mortgage regulations are pro-consumer - they work to make the British lending system more transparent and user-friendly.
Unlike comparable industrialized nations, Britain's mortgage industry is not regulated by the government. The FSA is an independent, non-governmental body invested with regulatory powers over the financial services industry of the UK. The FSA aims to improve the industry by making its operations open, legal and non-exploitative. In turn, by the FSA's logic, this will increase consumer confidence and thus increase financial activity and economic growth.
Making the Mortgage Industry Work For You
In the case of the mortgage industry, FSA regulations are meant to stamp out criminal or predatory lending practices. This is achieved in various ways. The most major change created by the UK mortgage regulations is the compulsory registration of all mortgage lenders. This means no one can engage in mortgage lending without FSA recognition.
With recognition then comes compliance - all authorized lenders must follow a set of lending rules and practices. Noncompliance can result in the loss of lending rights, fines and even incarceration.
Most of the new UK mortgage regulations are designed to aid British consumers navigate their way through the often complicated process of getting a mortgage.
Mortgage Advice that Makes Sense
British mortgage lenders based their rates on complex financial indicators. As well, lenders often offer a wide variety of different mortgage types. Together, these factors can bewilder the average borrower, leaving him open to misguided or predatory lending.
The FSA regulations were set up to remedy this. With the advent of the mortgage regulations in the UK , lenders now have to clearly provide prices and the pros and cons of different mortgages in their advertisements. A "Key Facts" sheet is also provided to borrowers. It is a mandatory listing of important information about the mortgage being bought, so that consumers can readily compare different mortgages.
Also, mortgage sales are now divided into two types - information-only sales and advice sales. In an information-only sale, the lender or adviser is only required to provide information on the mortgage, not advice.
If the consumer opts for an advice sale a registered and trained adviser is required to guide the borrower to choose a financially appropriate mortgage. That is where we can help with fully trained mortgage advisors here at Best UK Remortgages ready to find you the right remortgage product whatever your circumstances.