Sub-prime probe welcomed

Lenders have welcomed the Financial Services Authority\'s pledge that sub-prime will be one of the first parts of the mortgage industry to be probed.

Speaking at the Council of Mortgage Lenders’ annual conference last week, Clive Briault, manager of retail markets at the FSA, told delegates sub-prime would be one of the first areas to be targeted under the new regime. As well as checking on firms to ensure that they are not carrying out any unauthorised business, the FSA will police marketing, financial promotions, on top of specific ‘higher risk’ product areas.

Briault told delegates: “We will be visiting some firms to review their marketing strategies in these product areas.”
Feedback from lenders is that this is the perfect opportunity to clean up the market. BM Solutions says no sub-prime lender should have anything to worry about, providing their products are transparent and offer good value to customers.
Alan Cleary, head of sales at BM Solutions, says: “If I were the FSA, sub-prime is the first area I would look in to. Some lenders are paying silly proc fees, where customers are paying through the nose.

“Our offering is transparent and good for the customer. In our opinion, those companies that are doing it properly have nothing to fear.”

And Peter Stimson, head of product development at GMAC-RFC, says: “In a regulated environment it was perhaps to be expected that the FSA would concentrate on these high profile segments of the market first.

“As the UK’s largest non-conforming lender we look forward to working with the FSA on current and future regulatory issues.”