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.