With the Financial Services Authority (FSA) currently conducting the second stage of its review into the self-cert sector, a broker, who wished to remain anonymous, admitted that fraud was rife in the market, with borrowers keen to inflate their earnings as a way of increasing the amount that they could borrow.
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The broker said: “I would say that 90 per cent of my self-cert cases are not. A 50 year-old dinner lady becomes a catering consultant earning £50,000 a year, and virtually every postman turns into a courier earning up to £60,000. How on earth are these people going to repay their remortgages or loans? Their homes are immediately at risk because of the high amount borrowed. Where does that leave me? Am I committing fraud too?”
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Robin Gordon-Walker, spokesperson at the FSA, said: “We are currently in the second phase of our review into the self-cert sector and expect to release our findings in the Summer. It is a broker’s responsibility to deal with clients and establish their position. Potential borrowers must not overstate their income or vocation and colluding with borrowers to inflate income is a criminal, fraudulent offence.”
Gordon-Walker added that the self-cert review expected to see improvements to broker’s record-keeping and why they had recommended the borrower opt for a self-cert mortgage.
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