Revised guidance on quotation searches - 3 January 2007
Following discussions with the Council of Mortgage Lenders (the CML) , the Financial Services Authority (the FSA) and the Association of Mortgage Intermediaries (AMI) it is evident that there is still some confusion over the types of search footprints that are left at different stages of the lending process - particularly in the case of mortgages.
A revised version of the guidance note has been issued to clarify the queries that were raised during the discussions which should make the difference between a quotation and an application clearer.
Quotation = how much will it cost?
Application = can I have it?
It is particularly important to be aware that guidance to shop around for the best deal is about identifying the best price and product for the consumer and not about making multiple applications until a lender is identified that will be prepared to lend the amount sought by the borrower.
Quotation Searches - non mortgage lending
Unlike the Mortgage Quotation search issue, there is no legal requirement to provide a quotation search facility for rate for risk quotations that use credit bureau information. However, it is clearly documented in the Consumer Credit papers from the DTI and is considered by the regulators to be best practice. At the same time, the OFT and ICO also support this approach and certainly the ICO have previously indicated that they expect all lenders that search bureau data for rate for risk products, to be capable of using the data without leaving a credit search.
The solution agreed for mortgages is anticipated to be the best option for other consumer credit products too and lenders offering rate for risk products are advised to consider their processing requirements without delay.
Quotation searches for Mortgages - PS 186
A meeting took place earlier this year at the CML between the CML committee of top 10 mortgage lenders, the FSA and the 3 consumer credit reference agencies, to discuss the registration of searches at credit reference agencies.
The issue of multiple searches registered for consumers "shopping around" for credit was previously raised with SCOR, in 2001, by the Information Commissioner and has also been included in the FSA's PS 186, the CCA White Paper and is the subject of comment from the OFT and the Treasury Select Committee (TSC).
A note has been agreed by the attendees as a reflection of the discussion and to provide the basis for the way forward for resolution of this matter across all products in a consistent manner across all 3 agencies and all Regulators. The OFT and the DTI were also sent copies of the note and are revising their documentation to reflect the content. The DTI have also based their response to the TSC on the outcome.
The CML and FSA have recently suggested revisions to the note based on a number of queries that have arised and the new version is:
Searches: Original and now obsolete paper FSA General Insurance and Mortgage regulation, CCA White paper and OFT guidance. Link to pdf
Experian will be communicating with their clients to ensure that all systems are compliant. Additionally it is important that all lenders examine their front end processes and, in particular, those lenders that use the services of brokers, to ensure that their potential customers appreciate the difference between a quotation and an application.
Disclaimer: The information contained on this webpage is provided for general guidance only. It is not intended to provide you with professional advice nor is it intended to substitute you obtaining professional advice.
