FSA Mortgage Broker Crackdown

by Stewart Douglas

Story link: FSA Mortgage Broker Crackdown

Industry regulator the Financial Services Authority has today announced it is embarking on a crackdown of unscrupulous mortgage lenders and lending practices which have been uncovered in the industry, particularly in selling heavy mortgages to those that can least afford them.

Speaking today on the state of the mortgage industry the Financial Services Authority said that it would begin a significant clamp down on the dishonest brokers currently operating within regulated markets, particularly in light of a total of four in depth investigations into brokers already this year, with 65 additional firms in line for further scrutiny.

The Financial Services Authority alleges problems within self certification mortgages which see borrowers actively encouraged to inflate their income and earning potential to obtain more generous mortgages in order to increase the value of each sales lead could lead to an underlying housing crisis in the UK, of a similar scale to the sub-prime situation witnessed in the US. 

The Financial Services Authority has today urged mortgage brokers to carefully consider self certificated earnings figures from customers, and indeed to consider reasonableness of mortgage burdens as a whole when deciding whether or not to sell to prospective customers in order to avoid falling foul of industry regulations.

Seven additional brokers are currently being subject to investigations by the FSA, with the potential for charges of fraud to be levied against those falling below the strict requirements for selling mortgages imposed by statute and by the industry regulators.  It is thought that the FSA may continue investigations over the coming twelve months in order to avoid damaging the reputation of the industry and having an adverse impact on the customers to which they relate.