Once upon a time people mortgaging or remortgaging had one guiding principle to follow that could protect them against financial institutions taking advantage - the old English legal principle of 'caveat emptor' - let the buyer beware. In practice this meant taking your own steps to ensure you were sold the right product, asking questions, maybe taking advice from different sources etc, and your remedy was generally to go to law after the event to try to rectify any negative situation.

Regulation by Governments goes back a long way, but in recent years they have increasingly set up a regulatory environment to try to offer the consumer greater protection. The most recent being The Financial Services Authority and The Financial Ombudsman Service. But who are they and what do they do?

THE FINANCIAL SERVICES AUTHORITY (FSA)

The Financial Services Authority was established in 2001 as a sort of super regulator. It absorbed many areas of regulation concerned with banks, money markets and consumer finance advice and more recently mortgages and general insurance.

The FSA both authorises and regulates the various bodies in the mortgage industry including both lenders and intermediaries such as banks, building societies, financial advisers and mortgage brokers.

So for example, a mortgage broker or bank must be 'Authorised and Regulated by the FSA' before it can do business in the mortgage market for what is called 'regulated mortgage' contracts. ' Most mortgages or remortgages for residential purposes will fall in this category and so be covered by the FSA.

The FSA operates by issuing general principles that companies must meet. Currently these are reinforced by rules many of which are not explicit and everyone has to interpret them as they see fit which leaves a lot of room for differing interpretations. Wherever there is doubt the firm must comply with the principles.

ADDRESSING YOUR NEEDS AND CIRCUMSTANCES

Banks, building societies, financial advisers and mortgage brokers are obliged to put your needs and interests first. Most people in this field now do what's known as a 'fact find' in which they ask you detailed questions about your circumstances and what you are trying to achieve. This is to enable them to build up a picture of your financial circumstances and to help them ensure that whatever they recommend or source for you fits both your finances and your objectives. One of the FSA principles is that firms must treat there customers fairly. So for example an adviser must not propose a particular mortgage deal or lender because they will get more commission that way.

BEING FAIR, CLEAR AND NOT MISLEADING

Whoever is helping you must communicate with you in a way that is fair, clear and not misleading. another principle. They must couch everything in clear language without using jargon so that you can understand what they are telling you. They must not mislead you by leaving out important information or details you need to know to arrive at a reasoned judgement of what is best for you. They should spell out different fees charged by different lenders, their own fees and items such as penalties for early repayment of your mortgage, which could be a barrier to switching in the future. And they must be fair, by protecting your interests at every stage of the process from initial sale through to after sales service and offering a transparent, efficient and professional service.

AFFORDABILITY

A key issue is what a borrower can sensibly afford. Institutions cannot just arrange a mortgage without regard to your income and outgoings and FSA require this to be established early on. Every lender has to behave responsibly and a mortgage offer must be based on what you can sensibly afford to repay.

It's important to be accurate and honest about your income. You generally should be able to document all your income even if it comes from various sources. Pay slips, or P60s if the former are not readily available, or accounts or tax returns for the self employed. Some lenders no longer require proof of income or full status and offer self-certification but that is not a license to 'fudge' your income simply to get the loan. Remember it is a criminal offence to provide false income details on an application form; In any case it is not in your own interest to go for loan that is bigger than you can afford.

HOW DO YOU KNOW IF A DEAL IS NOT RIGHT FOR YOU AND THE INSTITUTION IS NOT TREATING YOU FAIRLY?

Whether you are talking to bank, building society, adviser or mortgage broker, they should discuss the affordability of the repayments for the loan you are considering. They should discuss options with you and explain what the differences are and how they affect you. Fees, charges for early repayment, commissions and legal fees also need to be spelt out clearly.

Similarly if you are considering taking a loan that extends into retirement, your broker and lender should be asking you to think about how you will repay it. Is it reasonable that you could work past retirement or that you're your pensions may be sufficient? Many people say they will "sell the property" but that may only work if you have sufficient equity to acquire a new home. A Lender or intermediary should discuss all these matters with you.

COMPLAINTS AND THE FINANCIAL OMBUDSMAN SERVICE (FOS)

Whilst the FSA is the regulatory authority for the mortgage industry, it does not handle complaints from individuals. If you have a complaint about your mortgage arranger or lender then your first step should be to formally register a complaint with them. There is a recognised complaints procedure under FSA rules.

If you are unable to get satisfaction then your next step could be to make a formal complaint to FOS. This independent authority is there to consider complaints and give a ruling. And once accepted they are binding on both parties. If the ruling goes against you can refer it to an ombudsman whose ruling is binding on the firm, but not on the client.

Before you are tempted to ask a solicitor or anyone else who will charge to represent you remembers that the whole complaints procedure is free to the client and that you will not be awarded legal costs by the FSA or FOS.

CAVEAT EMPTOR

Despite all these regulatory protections the final decision is still yours. So consider all the aspects of your potential mortgage advance carefully. Think y about what you can afford in the way of monthly repayments. Look at your commitments both now and in the future as well as your income. If a fixed rate changes to a higher rate can you afford the change? Take into account different fee levels on different mortgage offers and potential charges for switching mortgages or lenders in the future. Make sure you consider all the possibilities on the market and don't just grab at the first offer you receive. If you are talking to a bank or building society check that they are not tied just to their own products and similarly if you are being advised by a Financial Adviser.