Second firm in FSA firing line for reckless lending
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The Financial Services Authority is investigating a second firm for irresponsible lending practices in the mortgage market, Mortgage Strategy can reveal.
In February DB Mortgages, part of Deutsche Bank Group, was fined £840,000 for irresponsible lending practices and unfair treatment of customers in arrears. It was the first time the FSA penalised a firm for irresponsible mortgage lending.
But a Freedom of Information request by Mortgage Strategy to the FSA reveals another firm could be in the firing line.
A spokeswoman for the FSA says: “We can confirm that the FSA is currently pursuing one investigation into irresponsible lending practices in the mortgage market.”
DB Mortgages was criticised for failing to show whether borrowers could afford loan repayments into retirement and neglecting to consider if cheaper deals were available.
The fine by the FSA has prompted a number of claims firms to offer services that target brokers for the alleged mis-selling of mortgages.
Brunel Franklin last week launched a mortgage mis-selling service going after brokers it claims mis-sold mortgages.
The Association of Mortgage Intermediaries plans to voice its concerns about claims management firms to the Ministry of Justice and the Financial Ombudsman Service.
Robert Sinclair, director of AMI, says a lot of firms have launched services following the DB Mortgages fine because they expect the FSA to take action against others.
He says: “We will be speaking to the MoJ and FOS to ensure claims firms are acting responsibly and not speculatively just because of the DB Mortgages fine. There are a number of areas we are concerned about.”
Sinclair is worried that if the trend in mortgage mis-selling claims firms continues it could prompt more customers to complain to FOS because they believe they have a claim even if they don’t.
He says: “It will be time consuming for brokers because of the sheer amount of data and files they will have to produce if a request is made by a claims firm or FOS.”
FOS allows firms to receive three complaints against them before char-ging a fee. Once a fourth complaint is made FOS imposes a £500 fee.
If brokers are members of a network, the three complaint limit app-lies to the network not the broker, so a broker is likely to pay for the first complaint against them.
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Readers' comments (5)
Michelle | 14 Mar 2011 11:34 am
Sounds to me like the mortgage intermediaries are a little scared of what is just round the corner. Everybody knows that there are rogue brokers and its fair to go after these. Brokers who have acted legally and in the best interest of the client have nothing to be worried about.
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Anonymous | 14 Mar 2011 11:41 am
Just one ?
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Toddy | 14 Mar 2011 11:43 am
If the claim management is filing a claim that later turns out to be unfounded and speculative, they should be made to foot the claims fee.
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Anonymous | 14 Mar 2011 11:56 am
Michelle.
Perhaps you should re-phrase your post to "rogue mortgage lenders".
It was DB Mortgages that was fined in this instance not a broker.
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Andy | 14 Mar 2011 2:07 pm
Michelle. It's the absurd length of time it takes to respond to the complaint that's the issue. I may have the most robust file in history, but I still have to spend hours and hours of work to process one complaint. Times this by several 'chancers' I may have to call it a day.
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