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Brokers preferred for certain home loans
Certain types of applicants looking for home loans are now turning primarily to brokers to track down their deals according to the FSA. Applicants for sub-prime loans are more frequently using brokers to locate and apply for home loans and mortgages.
Although the FSA worries about this trend, saying that consumers may not be making the most properly informed choices, by saying that it is admitting that brokers may not be following it's own TCF requirements. The TCF scheme, or Treating Customers Fairly, is an initiative rolled out by the FSA to make firms act fairly and in the best interests of their customers.
Given that brokers are sticking to the FSA's rules in this area, the issue they could be worried about is the small range of alternatives some brokers are able to offer. Customers may be wrongly assuming that brokers have investigated a full range of home loans when suggesting alternatives to applicants, and in wrongly assuming that, customers may not be shopping around themselves.
The FSA had conducted a review of some specific parts of the home loan marketplace, but unusually those parts of the market, which made up 10% of total mortgage lending, have undergone a major upheaval since the review took place and the findings may not be as relevant now. Certainly the scale of the sub-prime home loan marketplace has undergone dramatic reduction during the credit crisis and many loan applicants that would have qualified for loans during the period of the FSA review may now not qualify.
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