View more on these topics

FSA reports mixed results from self-cert survey

The Financial Services Authority has reported a mixed result following the completion of its research and mystery shopping work on self-cert mortgages.

The FSA welcomed the improvements made by lenders in the way they operate their self-cert mortgage business since the FSA issued a good practice guide in February 2004.

The review work found that in general lenders have strengthened systems and controls leading to increased detection rates for fraudulent applications, made improvements in the quality of information transferred to underwriting departments, and improved identification of staff training needs for self-cert business.

Additionally a number of lenders have had to take specific corrective action as a result of FSA supervisory work.


Clive Briault, managing director of retail markets at the FSA, says: “We welcome the improvements made by lenders in the area of self-cert. But in the light of competitive pressures, tighter margins and rising arrears levels, we expect lenders to remain vigilant and to ensure that their systems and controls are regularly reviewed.”

The FSA also reviewed sales and advice on self-cert mortgages by small brokers. Mystery shopping of 41 intermediaries found that there had been no systematic fraud regarding inflation of income to obtain a larger mortgage. However three firms were prepared to discuss with clients how they could inflate their salary in this way and the FSA has followed this up with the firms concerned.

In supervisory visits the FSA found that in 47% of 249 cases reviewed the firm was unable to demonstrate that it had appropriately assessed affordability. And in 36% of cases no reason was given, or the reasoning was unclear, as to why a self-cert mortgage had been recommended.

Briault adds: “The findings on sales and advice from brokers show significant weaknesses which are disappointing. Further work needs to be done not only on affordability and suitability checks but also on the record keeping of the advice given. But it is encouraging that we have found no evidence to suggest that salary inflation is widespread or systematic within the broker industry.

“We will be working with the firms reviewed and today are publishing a summary highlighting examples of good and poor practice, designed to help intermediaries to understand and meet with our requirements.”

Recommended

Freehold reveals its first 16 members

Freehold has announced the first 16 members to join the packaging association.Paul Brett, spokesman for Freehold, says: “I am delighted to welcome our first 16 members who represent some of the most active regional packagers in the UK. We are in advanced talks with three other firms, and our intention is to cap the membership […]

Wills service for brokers unveiled

Broker Wills has been launched to offer brokers a high tech will-writing service specifically designed for brokers and financial advisers. Legal solutions company Epoq, which designed the service, says that unlike existing services that provide advisers with a small royalty or make them spend time preparing all the paperwork for clients’ wills, Broker Wills offers […]

Touch and go

Touch-screen information points will be available at the Mortgage Business Expo in London so delegates can tailor their visit to their needs. The information points, provided by Dataco, were deployed at the Mortgage Business Expo in Manchester earlier this year to help delegates get the most out of their visit.

MPLC underwriter joins em- team

The em- processing department has been joined by Carolyn James, onsite underwriter for Mortgages plc.Peter Beaumont, sales and marketing director from MPLC, says: “We are delighted to support em- with this facility and from past experience we know having an onsite underwriter in place can have a very positive impact on this type of relationship. […]

Healthcare regulation amalgamation predicted for Gulf states

While Dubai is leading the way in terms of legislating for expat healthcare in the Gulf, Qatar, Abu Dhabi and others are watching and learning – that’s according to Jelf International’s director of international services, Doug Rice. He believes the pace of change in the Gulf states will continue and that some level of unified healthcare system will be introduced across the region.

Newsletter

News and expert analysis straight to your inbox

Sign up