View more on these topics

Enterprise welcomes FSA wake-up call to sub-prime advisers

Michael Clapper, CEO of London-based Enterprise Group, has welcomed the findings of the recent FSA review on sub-prime mortgage advice and warned brokers to see it as a wake-up call.

The review conducted by the FSA, was to assess whether advisers were taking reasonable steps to ensure that recommendations to take out sub-prime mortgages were suitable to the needs and circumstances of the customer.

It found in 80% of cases, that there was lack of evidence to show how the recommended sub-prime product met the customer’s needs and circumstances.

Clapper says: “This is what we have been warning about for some time. Advisers choosing to access sub-prime lenders directly or accepting automatically cascaded solutions, without researching the market thoroughly first and just for the benefits of speed and
ease of use, are at risk of falling foul of the regulator. Brokers must prove that the market was thoroughly researched prior to making a recommendation.”

Andy Watson, head of the mortgages and credit union department at the FSA, says: “Sub-prime is a growing area of the mortgage market and we have identified it is a priority area for our mortgage supervision.”

“Many of the failings related to poor record-keeping, and brokers could provide more detail when challenged, but we will be looking for better evidence of compliance with our requirements in
the future.”

Clapper adds: “The benefits of a sound packager have never been so significant, now that the FSA have warned they will be looking more closely at record-keeping and the justification of recommendations being made. Enterprise supports its introducers by providing seven factually ranked solutions in minutes, from our entire panel of lenders, based on any client priority requested. This has no lender, product or fee bias and provides a full record for the client file that all options were considered prior to making a recommendation. Brokers using our service can sleep well at night, knowing that they cannot fall foul of the regulator in reviews to come in this area.”

Enterprise Group is widely recognised as one of the largest and most innovative providers of broker services in the UK, specialising in the packaging of mortgages, secured loans, bridging finance and commercial loans, under branded arrangements.

Current partner networks include Openwork, Mint Financial services, Thinc Destini and Home of Choice.

It is authorised by the FSA, as an Arranger of regulated mortgage contracts.


Recommended

Have your say on the future of CII

The ABI Critical Illness Working Party review into critical illness insurance has now reached a crucial stage. The consultation paper has been completed and is out for comment. It sets out proposals which aim to ensure CII is sustainable in the long-term.

Lenders slammed for lack of imagination on FTB deals

Vesta Packaging has slammed lenders for failing to restart the first-time buyer market by sticking to outdated income multiples and mortgage terms. The company says stable house prices mean now is an ideal time for aspiring first-timers to re-enter the market. Vesta managing director Mark Leaper says the best ways to kick-start the market are […]

Open standards must work for all

The vision of open standards in the industry is exciting for brokers but lenders and sourcing systems must be convinced there is something in it for them, says Frank Eve

KFIs must be more user-friendly

KFIs are not having the intended effect and the FSA must think of a way of making them more user-friendly so customers can use them to shop around for mortgages, says Bill Warren

Why prevention is better than cure

Quoting the famous adage, prevention is better than cure; there are many proactive benefits that can improve wellness in the workplace, decrease stress, increase staff morale and reduce absenteeism, as well as attracting and retaining employees of a higher standard. With a recent study showing that employees in Britain are working below peak productivity, preventative benefits can ensure you address potential health issues or causes of stress at their source and ensure productivity in the workplace remains at an optimum level. With this in mind, how are you using preventative benefits to help keep your workforce happy and healthy?

Newsletter

News and expert analysis straight to your inbox

Sign up