Gaping hole in FSAs new rules leaves consumers out in the cold
Only five days since the launch of the Financial Services Authoritys new mortgage regulations, designed to protect consumers from mis-selling, Which? has identified a loophole which leaves people with no access to redress.
In an unprecedented move the FSA has given 'interim authorisation' to 25 firms* whose applications to trade under the new regulations have either been refused or not yet approved. While these firms have to follow FSA rules, they are not covered by the Financial Services Compensation Scheme (FSCS). This ultimately means that people who have bought mortgage products from these companies are left with inadequate protection should anything go wrong. Laurence Baxter, senior policy advisor, Which? said: "We put the FSA under notice to deliver regulations which would put the public's mind at rest when it came to making the biggest financial decision of their lives. Unfortunately it looks like the FSA has fallen at the first hurdle. "People receiving bad advice from companies with only 'interim authorisation' and therefore not backed by the FSCS will not be able to claim recourse should these firms cease to trade (e.g. their appeal is rejected) and things subsequently go wrong. "There are plenty of firms who do have full authorisation. We urge people only to take mortgage advice from fully authorised firms. You can check the FSA's website to ensure that their mortgage advisor has FULL authorisation under the new rules." Notes:
*The FSA website (www.fsa.gov.uk/fsaregister) have listed 25 firm on their website how currently hold this interim authorisation. List of companies that have interim authorisation: - Nunzio Dipace, Bedford
- Easy Financial Ltd, Wembley
- Trevor Mardner (Mardners Insurance), London
- John Walker (Midlothian Mortgages), Gorebridge
- Eastend Properties Limited, London
- Heritage PFC, Cambridge
- Infield Enterprises, London
- Mr Paul Andrew Ashurst, Blackburn
- Mr Angus McKay, Glasgow
- Moon Financial Services Ltd, Leicester
- Homebuyers (Westcountry) Ltd, Chippenham
- Citylink Finance Europe Ltd, London
- Prompt Financial Solutions Ltd, Warrington
- Link Business Services, Hayes
- Connex Financial Services Limited, London
- Khungar Home Loans Ltd, Hounslow
- Prominence Technology Ltd, Barking
- Aspen Morton UK Ltd, London
- Partners Estate Agents, Porth
- Colin Hookey Mortgage Services Ltd, Bournemouth
- Asset Property Investment Ltd, Yeovil
- Alpha Financial Consultants Limited, Barnet
- Greenfields Financial Management Limited, Poole
- Charles Pemberton Limited, London
- Grosvenor Butterworth Financial Services Limited, Newport
The Financial Services Compensation Scheme (FSCS) is a scheme in which all authorised firms must participate. It allows consumers to get compensation for claims against authorised firms that are no longer trading when the complaint is made. It is a vital piece of protection for consumers especially with long-term contracts such as mortgages. Financial News Feeds provided by OneCompare.com
Date published: 11/9/2004 10:10:35 AM
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