The Financial Services Authority says it has no plans to change its final rules covering self-cert mortgages following revelations that some brokers are encouraging clients to exaggerate their income.
A damning investigation by the BBC's The Money Programme last week revealed advisers – including high street branch staff – encouraging clients to submit vastly inflated income statements to obtain larger loans. In one case, a Birmingham Midshires Solutions adviser admitted stating a client's income as over £100,000 when it was less than £35,000.
The revelations led some lenders to suggest a rethink by the regulator would be unavoidable. But the FSA says it will stick by its final rules as published last month.
Spokeswoman Kate Bristowe says: “While we will not be changing our final rules we are consulting on reporting requirements. Providers will be requested to submit product sales data on every transaction including self-cert mortgages.”
But some lenders suggest the impact of the programme may be sufficient to prompt FSA action, particularly if the exposed malpractice is found to have contributed to record rates of house price inflation. Mortgage Strategy understands that the regulator has already contacted some lenders with enquiries over self-cert risk.
Charles Haresnape, head of mortgage sales at NatWest, says: “The FSA is bound to take another look at self-cert in light of this and lenders themselves may have to review it.”
And Ron Howell, sales and marketing director at First National Mortgage Company, says: “The FSA could well take a position whereby responsibility rests with the lender to ensure any selfcert application is thoroughly vetted.”