Rogue lenders shamed by TCF crackdown
The UK FSA to name, shame and punish predatory mortgage brokers
LONDON – The UK Financial Services Authority (FSA) has launched what it has said is “one of the biggest crackdowns in its history” to name and shame mortgage brokers that encourage house buyers to take on loans they cannot afford to repay.
The FSA crackdown comes after financial watchdogs revealed operational malpractice by mortgage brokers that irresponsibly push first-time buyers into ‘self-certification mortgages’ – where mortgagees need only state their income, without standard employer or credit history checks.
From a series of reviews made by the FSA as part of its Treating Customers Fairly (TCF) policy, it appears low-income house buyers with patchy credit histories have been encouraged to misrepresent their finances to qualify for bigger mortgages and get on the housing ladder.
“These practices are completely inconsistent with Treating Customers Fairly – hence the large number of enforcement referrals and other regulatory actions,” said Stephen Bland, who is leading the FSA’s mortgage broker supervision.
As the timetable for the FSA’s TCF implementation strategy is being accelerated, the FSA is racketing up pressure in the face of criticism that its regulation to date has lacked regulatory teeth.
The Council of Mortgage Lenders said the moves towards enforcement should serve as a wake-up call to mortgage brokers that fail to deliver fair treatment to their customers.
It has announced four firms must cease trading until they have reformed their selling practices. Seven more brokers have been referred for enforcement actions that could lead to heavy fines.
A further 10 firms have received a final warning before they too face similar action, and 65 brokers have been ordered to review thousands of mortgages they have sold over the past few years.
The announcement comes after two £10,500 fines were administered to Lawrence Scoffield Mortgages and Council Homebuyers (Midlands and North), and Mortgage Network Solutions’ publicly censure, for similar misconduct.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
One year on, regulators still want a cure for bank runs
Broad support for higher outflow assumptions on uninsured deposits, but that won’t save insolvent banks
Watchlist and adverse media monitoring solutions 2024: market update and vendor landscape
This Chartis report updates Watchlist monitoring solutions 2022 and focuses on solutions for sanctions (name and transaction) screening and monitoring adverse media and its related elements
Basel Committee reviewing design of liquidity ratios
Focus on LCR and NSFR after Silicon Valley Bank and Credit Suisse, but assumptions may not change
Risk, portfolio margin, regulation: regtech to the rescue
A white paper outlining the complexity of setting the course for risk, margin and regulation
Prop shops recoil from EU’s ‘ill-fitting’ capital regime
Large proprietary trading firms complain they are subject to hand-me-down rules originally designed for banks
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Most read
- SG trader dismissals shine spotlight on intraday limit controls
- Basel Committee reviewing design of liquidity ratios
- Too soon to say good riddance to banks’ public enemy number one