FSA wants mortgage advisers to undergo a written test

All mortgage advisers could be forced to pass exams under proposals aimed at giving better protection to the 1.2m people a year taking out home loans, it was announced yesterday.

That could mean as many as 70,000 individuals having to pass a formal test; even those advisers who have professional qualifications may need to pass a "top-up" exam under proposals from the financial services authority.

The rule change formed part of the FSA's plans for how it will regulate lenders and mortgage advice from mid-2004. "We want to make sure consumers get clear, comparable information on mortgages, and that where they get advice they are recommended a suitable mortgage," said Sarah Wilson, director of the regulator's high street firms division. The FSA said that a home loan was one of the biggest financial commitments many people would ever take on.

There are some notable omissions from its regime - the FSA will not be regulating buy-to-let mortgages, home reversion plans usually bought by elderly people, or additional secured lending.

The FSA is proposing that individuals recommending products will have to meet minimum training and competence standards, which would include taking an exam.

It is estimated there are 70,000 mortgage advisers in Britain - about 40,000 working for brokers and other intermediaries, and another 30,000 working directly for lenders. About half of this total have already sat exams and obtained professional qualifications, according to the Mortgage Code Compliance Board, the body regulating mortgages.

The FSA said it recognised there would be some advisers who already met minimum standards of competence. It said: "In the light of the decision we reach on the precise exam requirement, we will consider whether individuals who meet the requirements of the MCCB fitness and competence regime will need to pass any 'top-up' exam or other relevant assessment."