When the regulator concludes its review of non-conforming lending in June, it is expected to chastise brokers for their inadequate commitment to regulatory principles. It is reported that more than 75 per cent of small mortgage brokers are likely to be targeted.
One notable area of criticism was self-cert deals, where out of 40 per cent of the deals done, 80 per cent had insufficient paperwork to clarify whether the product was suitable or not.
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Mike Davies, head of compliance at Infinity Mortgages and board member of the Intermediary Mortgage Lenders’ Association, had seen the report and commented: “Two or more years after regulation we should not be in the state that the FSA finds us. We are at least three to four years from being a regulated industry if we can’t even tell if brokers are compliant or not because they are failing to keep proper paperwork.’
Davies also claimed that intermediaries do not see themselves as a point for selling products to their clients, and are not offering people the best advice for their circumstances.
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Lenders have also come under fire in a second FSA report, where they are criticised over basic failures. With an industry move towards online application systems it is anticipated that problems will be reduced over time, but lenders are already exercising measures to ensure that records are kept and that underwriting is efficiently completed.
Robin Gordon-Walker, spokesperson at the FSA, said: “We are publishing a report on non-conforming lending, and when we were going over it initially we picked up a lack of record-keeping as not being very compliant. This is always a problem in handling advice and ‘Treating Customers Fairly’ and unless a record is kept, it is a problem.”
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