The Financial Services Authority (FSA) has warned that some mortgage brokers are badly managed and lack appropriate controls. In some cases the result has been misleading advertising and promotions. The warning concerns mortgages for those with a poor credit history. Homebuyers in this situation will find it more difficult to obtain a mortgage and may well have to turn to the 'sub-prime' sector.

This section of the mortgage industry has expanded rapidly in recent years but, according to the FSA, customers often end up paying more than the advertising material would suggest. In some cases the real cost of the fees involved was not made clear. There were also some homebuyers who did not have a poor credit history, but were still sold high interest rate sub-prime mortgages. The FSA looked at material from hundreds of firms and in October and November they visited those considered to be the worst cases.

200 mortgage brokers will now have to change their misleading adverts. The FSA have warned that their priority is to make sure that customers in this area of the market are treated fairly. They will intervene where necessary and this could include more disciplinary action at a later date.

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