Despite vast improvements made within the sector to eradicate the issue of fraud, Alan Lakey, senior partner at Highclere Financial Services, admitted his concern regarding the self-cert market.
Lakey called for lenders to adopt a universal approach in what they ask intermediaries for. He said: “I have a real fear that the self-cert sector will ‘blow-up,’ with a watchdog kind of expose on it as there are too many discrepancies and uncertainties about it. If a client comes to me and says that he earns a basic wage of £20,000, but takes home a different amount, say £50,000 a year then questions are, of course, going to be raised. It may be legitimate, to do with business bonuses and so on, but it is hard to adequately reflect it. Surely the inland revenue and other organisations would want to know more if salaries and gross income differ so much. With lenders asking for different information it’s hard to complete a truly self-cert mortgage.”
He added: “The Financial Services Authority (FSA) won’t want to know about the lender, they will want to clamp down on the broker who gave the client advice.”
However, Tim Hague, director at BM Solutions, said: “The self-cert sector is a valid part of the mortgage market, serving a growing number of people. Brokers shouldn't feel they have to shy away from it. Lenders have their own processes in place to prevent fraudulent activities, as well as measures put in place by the FSA under mortgage regulation. However as with any mortgage, the whole of the market has a responsibility to be vigilant against any potential fraud.”
