Mortgage chaos ahead of deadline

Homebuyers could face a major headache if their brokers miss an FSA deadline.

15:40 24 September 2004

Homebuyers are being warned that they could be left mid-transaction if their mortgage broker does not meet the Financial Services Authority (FSA) deadline.

The FSA assumes responsibility for mortgage regulation on October 31st.

The online service Moneynet has already suspended a number of its mortgage broker intermediaries amid fears that many existing broker firms will be forced to cease trading when the deadline hits.

Moneynet believes that less than a third of all mortgage brokers will actually be ready in time to trade under the new rules. This means that hundreds of thousands of homebuyers could be left high and dry half way through their transaction.

"This is a potential disaster waiting to happen for many purchasers and sellers," said Moneynet's chief executive Richard Brown. "We are in the middle of what is traditionally one of the busiest times of the year for mortgage transactions and we learn that the majority of mortgage brokers have not yet applied for authorisation."

He added: "This inevitably means they will be required to cease trading on October 31st. The consequences for homebuyers and sellers could be appalling, with many applicants having to start the entire mortgage process again."

As such Moneynet is urging homebuyers to check that their broker has the necessary authorisation in place because brokers that have not yet applied for authorisation are unlikely to receive the necessary permission in time.