Commonly sold to the self-employed without any requisite proof of income, self-certification mortgage loans are a classic reflection of the financial services industry’s focus in recent years on individual affordability, as opposed to underwriting on the basis of borrower income, when it comes to assessing mortgage loan risks.
Carl Wright said: “We’re already seeing a steady trickle of fines being levied for self-certificated mortgage mis-selling but this is only the beginning and the trickle is absolutely certain to become a raging torrent in the very near future.
“Once again the authorities aren’t publicly acknowledging the problem. But this is yet another hornets’ nest which, once stirred, is going to sting the reputation of the financial services industry as a result of governance shortcomings.
“Once again the lack of a structure, enabling those with concerns to relay their views and seek immediate positive action to strike back at the mis-selling culture, is coming back to haunt the industry. Until a suitable mechanism is put in place, fiascos of this kind are going to re-occur time after time.”
This follows on from the recent furore concerning PPI policies designed to help borrowers repay their debts in the event they became unable to work due to accident, sickness or unemployment. Industry analysts believe that more than two million PPI policies have been sold in the UK to people likely to be ineligible to make a claim.
The Competition Commission recently announced a ban on the sale of PPI policies at the point of sale, but Carl Wright believes that this is too little, too late.
Carl Wright added: “It’s certainly a relief to see that PPI policies will shortly be banned at the point of sale, but this doesn’t hide the fact that the authorities who were supposed to be policing the financial services industry have had their heads buried in the sand for several years whilst PPI mis-selling has continued to spiral.
“Everyone in the industry knew that the mis-selling of PPI polices was becoming an epidemic as far back as 2004. The legislative framework in the UK simply wasn’t equipped to deal with it and it simply beggars belief that we’re now into 2009 before any formal action has been taken.”
Carl Wright continued: “Legislators are making lots of noise about how they propose to deal with the problem but the truth is it’s too little, too late. They’re denying they knew about the problem but that’s absolute rubbish. They just didn’t do anything about it.”
