Britannic Money has criticised the Financial Services Authority (FSA) for definitions used in its mortgage comparison tables, writes Paul Robertson.
The lender believes the definition of flexible mortgages is too inclusive and is disappointed at the omission of a table for current account and offset mortgages.
Table definitions, due to go live in October this year, also exclude buy to let, impaired credit and equity release products. As regulation is likely to take effect in 2004, the FSA considers it appropriate to launch the tables before the new regime.
The flexible product definition states that overpayments of up to 10% per calendar year are allowed without penalty. Interest must be daily or monthly and applied to all overpayments whether regular or lump sum. The terms must allow reduced monthly payments or a payment holiday, or both.
James Mayne, strategic development manager at Britannic Money, said: ‘For flexible mortgages the FSA has oversimplified and the tables will not provide any real value. The danger is that if you devise the easiest framework to provide information, while it may be inclusive of a lot of products, it can be meaningless. If there is no tight definition of the products listed, then it will be price driven, with less room to differentiate on features. A lender with a low rate but very little flexibility would look good on the tables.’
Current account and offset mortgages will not have a separate table because the FSA believes only a handful of lenders provide these products. The FSA plans to include a specific indicator confirming whether the mortgages offer a linked current account or savings account.
The Research Department (TRD) has been appointed as data collection agents. TRD and providers are jointly responsible for maintaining the accuracy of the data. The primary responsibility lies with lenders to keep the TRD up to date with any changes and to fill in and confirm verification forms as quickly as possible.