DB Mortgages’ £840,000 fine from the Financial Services Authority could pave the way for more action to be taken against firms for irresponsible lending.
Last week, DB Mortgages, part of the Deutsche Bank Group, was fined for irresponsible lending practices and unfair treatment of customers in arrears.
The regulator also secured re-dress of about £1.5m for DB Mort-gages’ customers. It criticised the lender for failing to show whether borrowers could afford loan repay-ments into retirement and neglect-ing to consider whether cheaper products were available.
It is the first time the FSA has penalised a firm for irresponsible mortgage lending and some believe the move could instigate further penalties for other lenders.
Fahim Antoniades, director at Mortgage Centre IFA, says it is likely to put more firms in the firing line and the FSA will continue to scrutinise lenders.
He says: “A lot of the problems stem from the fact that lenders’ staff have not been properly trained. The quality of advice customers are getting falls short of the level required.
“As long as lenders continue to fail to train their staff properly, they are going to be fined.”
But David Sheppard, managing director at Perception Finance, says it seems unjust to punish the lender on the basis of failing to consider cheaper deals for customers seeking self-cert mortgages.
He says: “It is unfair for the lender to be criticised for not offering more suitable deals as it was the brokers who were giving advice, not DB Mortgages.”
Sheppard adds there is the potential for other lenders to be fined over the coming years.
Richard Farr, director of Telos Solutions, says an accurate afford-ability evaluation is a standard expectation of borrowers.
He says: “This is just one example of the FSA becoming tougher and it is important for firms to be certain that their processes are robust.”