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Home loan lenders urged to raise their game

Home loan lenders are being asked to improve the quality of documents for consumers when setting out the details of their mortgages.

Key facts documents, which are intended to deliver clear and simple information to consumers, are variable in quality and contain widespread inaccuracies, according to the financial services watchdog.

The Financial Services Authority (FSA) has written to chief executives of mortgage lenders to offer help in improving the standard of these documents, which include Initial Disclosure Documents and Key Facts Illustrations.

It is asking all mortgage lenders to undertake a review of their documentation so as to provide consumers with clear and comparable information to help them understand the products they are being offered.

"We acknowledge the effort firms have made to produce the new mortgage disclosure documents and in our review we have seen some good examples. However, we also found cases where documents were not in line with the format and content required by our rules or were too long and written in overly-legalistic language," said the FSA's managing director of retail markets.

"Some key facts documents do not contain all the required information, and some include more information than the rules require, making them longer than necessary."

Eighty per cent of firms sampled had five or more errors in connection with their IDD documents, and the FSA is also seeking to reduce the length of KFI documents to no more than five pages.

CML director general, Michael Coogan, welcomed the FSA's feedback. "In cases where key facts documents are not in line with the FSA's rules, improvements will be needed and we are pleased that the FSA plans to work constructively with the industry to achieve this objective," he said.