Home loans: has the revolution gone well for you?

It's not a date you will have noted in your diary but 1 November was the second anniversary of "M-Day".

If you've bought or sold a property in the past two years, you will have been affected by the changes in the mortgage industry that came into effect in 2004, when the City watchdog, the Financial Services Authority (FSA), replaced a self-regulatory system with a new set of rules.

In has come the Key Facts Illustration (KFI), a document that must be handed to home-loan applicants when they approach a lender or broker. The KFI shows the true cost of a mortgage in a standard format - including fees, charges and the amount that will have to be repaid each month - and should allow consumers to compare different products.

Mortgage advice must be transparent as well, with borrowers receiving a further Initial Disclosure Document (IDD). This details whether they will get advice or just information from the firm, the range of products available, and how much they will have to pay for the service.

Lenders and brokers must deal with consumer complaints swiftly, and borrowers must be informed that they can take a grievance to the Financial Ombudsman Service if they are not happy with the way a problem has been handled.

But, two years on from M-Day, have the changes made a difference? Louise Cuming, from the price-comparison service Money- supermarket.com, thinks so: "Consumers really welcome having all the information - including fees and redemption-penalty details - in one document that makes comparing products more straightforward."

Many industry specialists, though, are still unhappy with some of the changes and argue that more needs to be done.

"The KFI was designed to give more transparency, but there are concerns the form is too lengthy," says David Hollingworth of broker London & Country. "They should only be around four pages but some run into double figures."

Lenders are trying to provide too much information, he adds. "This is counter-productive as the KFI is also only useful if people read it."

In June this year, the FSA carried out a review and found that the big mortgage lenders had made good progress in improving the quality of the documents. However, more than a quarter of KFIs issued by small lenders and both small and medium-sized brokers "still contain material errors relating to fees and charges".

Further, more than half of the intermediary IDDs reviewed by the FSA contained five or more errors.

The FSA is working with the industry to improve the content of the documents.

Since regulation was introduced in 2004, brokers have repeatedly voiced concerns over the expense of implementing the changes.

"It has undoubtedly cost lenders a lot of money to upgrade their IT systems to comply with regulation," says Ms Cuming. She warns that this has been factored into product pricing - and ultimately passed on to the consumer. "Slowly we have experienced increases to arrangement fees, exit fees and adjustments of standard variable rates."

A recent remortgage was made easier for Lynne Rooney, 48, from Cheshire, thanks to clear documentation. "I could compare both the fees payable and the interest rates," she says.

"Being informed about the Ombudsman instils peace of mind too."