OFT attacks code of mortgage conduct

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John Bridgeman, director-general of the Office of Fair Trading, yesterday attacked a planned mortgage lending code of conduct for a series of "shortcomings" that risked turning its proposals into a dead letter.

Mr Bridgeman claimed that the code's most serious failing was the absence of any sanctions against lenders that flout its provisions.

He also attacked the code for not ensuring that information provided to potential borrowers was sufficiently clear and for forcing them to sign a declaration saying that they had chosen their own mortgage for themselves.

"I worry because the borrower may perhaps be unilaterally giving up his right to redress for bad advice," Mr Bridgeman said.

The proposed code of conduct was published last year by the Council of Mortgage Lenders. Its aim is to ensure that borrowers will receive unbiased advice on the loans they are taking out.

However, Mr Bridgeman told delegates at the Building Societies Association's annual conference in Birmingham yesterday that while he was generally in favour of self-regulation by mortgage lenders there were several issues that still needed to be ironed out.

"The CML code of conduct is exceptionally good news. Though I am pleased at the attempt to promulgate best practice in the marketing of mortgages, I should like to know what sanctions there will be against any members failing to observe the provisions."

Meanwhile, Woolwich Building Society moved yesterday to quell doubts over its pounds 3bn flotation plans by announcing the appointment of a new finance director in place of Michael Tuke. Robert Jeens, currently the group finance director at Kleinwort Benson, will join Woolwich next month.