Under the current rules, consumers must receive a KFI each time they get information about a product from an intermediary that is specific to the amount they wish to borrow.
However, under proposals listed in the final Mortgage Market Review CP11/13, it would mean that, unless the consumer had received advice to take a product, they would only receive a KFI once they had indicated which product they wanted to proceed with.
The FSA has estimated that the cost of making changes to the format of the KFI could hit £23m across the industry.
However, it said the change in its proposals was intended to help minimise information overload on the consumer and limit the burden on intermediaries.
It has now proposed that the trigger points for when a consumer has to be given a pre-application KFI are when:
- An intermediary gives advice to the consumer to take out one or more products (a KFI should be provided for each product)
- The consumer requests a KFI, unless the intermediary is aware that it is unable to offer that product to them, or
- The consumer has provided the intermediary with details of a product it would like to proceed with under the execution-only sales route
The regulator has decided to stick to its proposal which requires firms to give consumers KFIs when they specifically ask for them, and to inform consumers of their right to do so.
It is also maintaining its proposal to make it easier for intermediaries to recommend lenders’ ‘direct-only’ deals to consumers by removing the obligation on them to provide a KFI for these products.
