Q & A

My sister recently got very poor advice from a mortgage adviser in the branch of a high street bank. I understand that mortgage advice is not actually regulated at the moment- what protection does she have and who should she complain to?

From 31 October, the Financial Services Authority (FSA) will take over regulation of mortgage advice and from this date compulsory FSA rules will replace the voluntary Mortgage Code. Perhaps surprisingly, it will mark the first time the mortgage market will be subject to comprehensive statutory regulation. The Mortgage Code, while voluntary, is enforced by most reputable lenders and sets standards for the levels of service and communication customers can expect.

The rules are designed to protect consumers from bad mortgage advice, but recent research by Which ? suggests the code does not always deliver consistently robust guidance and decent protection to consumers. In a recent 'mystery shopper' exercise involving 39 mortgage advisers in banks, building societies and independent financial advisers, 21 failed to properly explain the ways to repay a mortgage and 23 did not clarify the different deals available.

Your sister should have been given a copy of the Mortgage Code at an early stage in her dealings with the bank she took guidance from, but this pamphlet is quite vague about what to do when a complaint arises. It simply says that in the event of a complaint arising, the customer can expect their lender to have a procedure that aims to resolve it within set time limits. She needs to contact her lender to find out about its complaints process and keep a log of all the dealings she has with the company.

The Mortgage Board, which monitors the Mortgage Code, cannot intervene in individual customer complaints. However, in cases where lenders or intermediaries do not seem to have been following the code, customers can forward a copy of their complaint to it. It can then take disciplinary action if the lender refuses to deal with her complaint or is too slow or obstructive in dealing with it. If the situation is not resolved to her satisfaction, then your sister's lender is obliged under the Mortgage Code to give her details of how to take the complaint to the Financial Ombudsman Service or arbitration.

Contacts www.mortgagecode.co.uk; www.fsa.gov.uk/consumer, 0845 606 1234 ; www.financial-ombudsman.org 0845 080 1800