Mortgage advice poised for electronic regulation

The Financial Services Authority (FSA) is likely to turn to intelligent agent software and the Internet to regulate mortgage advisers it has emerged.

Current plans would see the FSA remotely monitor advice that many borrowers are given. It has been criticised by some Independent Financial Advisers (IFAs), even though it has not yet given the green light by the government.

Some kind of regulation looks very likely following problems in the past with the sale of pensions and endowment policies - often used to cover the cost of a house.

Nigel Bourke, proprietor of Stockton-on-Tees-based IFA, Nigel Bourke & Co, said: "This will probably mean yet another exam for us, but this has long been in the air, and it will be a good thing as I believe it will raise standards and consumer confidence."

The Council of Mortgage Lenders (CML) has 118 members, accounting for 98 per cent of residential lending. A spokeswoman said adapting to a new system would not be a problem for the big lenders.

"This is in the hands of the FSA, but I can say that looking at the firms we have, they're highly computerised already, and even the smaller ones would be able to cope," she said.

Jim Healy, market maker for ecommerce at ICL, said: "Once you have artificial intelligence or other electronic means of giving advice you have auditabability."

He said the IT services firm has been talking to the FSA this year, and despite protests from some IFAs, opinion is swinging behind some kind of computerised system.

Healy predicted there will most probably be a hybrid Internet-mobile phone-call centre system where brokers use intelligent agents to go out and find consumers the best deals, and leaving a trail that can be checked.

The FSA declined to elaborate on their plans.