As an industry we seem intent on destroying, in only a few years, a product innovation that has been successfully sold since the late 1980s and early 1990s. This is despite the fact that the FSA accepted that self-cert business was justified in certain circumstances.
Even before they took over from the Mortgage Code Compliance Board, the FSA confirmed in a ‘Dear chief executive’ letter that genuine self-cert lending represented 8% of new loans.
The FSA’s letter, dated February 2004, even went as far as to give guidance to lenders and brokers on the steps firms shouldtake to ensure that only genuine self-cert clients were accepted.
Post August 2007 events show that the advice of the FSA was all too often ignored by both brokers and lenders.
The only question that remains is has our industry destroyed its reputation with the regulators so much that the 8% of genuine borrowers using self-cert will be penalised?
The product already has appropriate controls but they only work if people follow them. My big fear is the FSA will get into a product-banning mentality and self-cert will disappear.