I am sure many of your readers were as concerned as we were at the Financial Services Authority (FSA), to read comments like, ‘we all know that there occasionally needs to be a bit of ‘creativity’ to get the client over the line’.
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The FSA has issued guidance in this area. It is important not to overstate your customer’s income as this is potential fraud. One of the key requirements to determine suitability of a product is for the adviser to have reasonable grounds to conclude that a customer can afford to enter into the regulated mortgage contract. This requires the adviser to consider the customer’s income and expenditure.
Our guidance states that advisers can generally rely on information the customer provides unless they have reason to doubt it taking a common sense view. We know some advisers incorporate ways of checking the plausibility of a customer’s stated income into their procedures, such as checking bank statements or old payslips. We are currently undertaking some further thematic work looking at the sales of self-certification mortgages and will be publishing our findings later in the year.
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In the meantime, I would urge the author of the original letter of 5 May, and any readers who find similar types of poor practice, to contact the FSA whistle blowing hotline on 0207 066 9200 to report a breach or call the FSA Firm Contact Centre on 0845 606 9966 to discuss the matter further.
I believe this information will make clear the issue for your readers.
Yours faithfully
Mandy Spink
Head of mortgages and credit unions, small firms division
FSA
