Specialist lending has developed to an amazing degree in recent years. Whatever a client’s requirements and circumstances, the discerning broker is likely to know at least one lender who can help.Unfortunately, the specialist lending market can also be open to exploitation and it is sad that a small number of firms believe they can misbehave without consequence. They cannot. Among results of the Financial Services Authority’s survey work on sub-prime announced earlier this month, came news that three firms face enforcement for inflating clients’ incomes in self-cert applications. Given that a) this is fraud, and b) the regulator will be keen to make examples of those foolish enough to consider doing this, understanding from the FSA will be in notable by its absence. Indeed, anyone who doubts whether it is possible to self-certify oneself out of business should take note – it isn’t just possible, there’s a fast-track process. The FSA has issued previous warnings on self-cert and ignorance will be no excuse for those bent on proving the theory of natural selection. One positive message from the findings was recognition of the steps taken by firms to benefit their clients and the number of such cases identified. These included examples of best practice beyond the FSA’s requirements, specifically in the area of rehabilitating credit scores and explaining the reasons for recommendations in follow-up reasons why letters. Some 31 small brokers were visited during the exercise, with the regulator assessing 210 case files to assess the suitability of advice given and how this was recorded. Of these firms, 58% intended to review clients’ mortgages once their credit profile had been rehabilitated and 65% issued suitability letters outlining the reasons for a recommendation. For its part, AMI recommends members continue to issue reasons why letters. FSA follow-up work is planned, with the emphasis on fact-finding and information gathering on products. While the paper trail can be a trial, the need to evidence every aspect of suitability and recommendation is now a necessity, not a luxury. If small firms should take a single message from these results, it is the need to check record keeping systems adequately outline the reasons for recommendations and advice given to clients.
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Charterhouse Research, the specialist financial market research consultancy, today reveals that the outlook for mortgage-related general insurance sales looks positive. Mortgage Intermediaries The Regulated Environment has been tracking the intermediary market in the face of regulatory changes via 100 interviews per month with intermediaries. House insurance and protection are natural partners to a mortgage and […]
The Office of Fair Trading says property information held by local authorities in England and Wales should be made more readily available to people buying and selling property and their agents.Over 1.5m property transactions are conducted in the UK (1.4m transactions in England and Wales) each year. Property buyers need information relating to a property […]
This is the 200th issue of your number one mortgage magazine so what better time to look back over the past 12 months? And what a 12 months it’s been. Business sales, acquisitions, network closures, mergers, failures, sackings, resignations and the biggest news of all – regulation. You name it, Mortgage Strategy has covered it. […]
There must be a way of changing the system so we can introduce some calm into the anxiety-inducing roller coaster process of completing on a house move, says Sue Read
By Jim Grant, Senior Product Insight & Technical Support Analyst The definitions of adjusted income and threshold income used to determine whether, and to what extent, someone’s annual allowance will be reduced can be confusing. Here we try to make sense of it all. The annual allowance will be reduced for high income individuals from […]
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