HOUSEHUNTERS in the south will find it easier to shop around for the most competitive mortgage from next year.

But the administration shake-up means banks and building societies locally must start making preparations now to avoid flouting tough new rules.

The City watchdog has set out the final rules that will govern the sale of mortgages when it takes over regulation of the products.

The Financial Services Authority's regime aims to offer better protection to consumers and ensure they are treated fairly.

Companies selling mortgages now have just over a year to ensure they comply with the new rules before they come under the FSA's jurisdiction on October 31, 2004.

Under the rules firms will have to ensure they provide consumers with clear and comparable information about the mortgage they are offering them to make it easier for people to shop around.

They must also make sure a customer will be able to repay the loan before they enter a contract, and meet new standards when dealing with people who have fallen into arrears or face repossession, including sending them the FSA's information sheet explaining what their options are.

Firms must also decide whether they want to be directly authorised by the FSA or become an appointed representative of an authorised firm.

FSA director Sarah Wilson said: "Regulation is just a year away. Firms need to start their preparations now."

She said the FSA would set up a contact centre in November and run a series of workshops to help firms prepare for regulation.

But she warned firms to apply for authorisation early as those who left it until the last minute may not be able to "get through the door in time".

CML director general Michael Coogan said: "The shape of mortgage regulation is now certain, and the clock is ticking towards Mortgage Day in 381 days.

"We welcome that the FSA has given the industry a full year to implement the new rules as we requested.

"The time for debate on policy has gone, and the industry must now move on to the practicalities of implementing the rules."

The group urged lenders and intermediaries to make sure staff were fully trained to comply with the new regime and that IT systems were capable of delivering the new key facts illustrations that must be given to all borrowers.

Mortgage lending in the UK is a massive business - total loans outstanding to property companies are at a new high of £95bn, according to financial data service Moneyfacts.