Rogue lenders shamed by TCF crackdown
The UK FSA to name, shame and punish predatory mortgage brokers
LONDON – The UK Financial Services Authority (FSA) has launched what it has said is “one of the biggest crackdowns in its history” to name and shame mortgage brokers that encourage house buyers to take on loans they cannot afford to repay.
The FSA crackdown comes after financial watchdogs revealed operational malpractice by mortgage brokers that irresponsibly push first-time buyers into ‘self-certification mortgages’ – where mortgagees need only state their income, without standard employer or credit history checks.
From a series of reviews made by the FSA as part of its Treating Customers Fairly (TCF) policy, it appears low-income house buyers with patchy credit histories have been encouraged to misrepresent their finances to qualify for bigger mortgages and get on the housing ladder.
“These practices are completely inconsistent with Treating Customers Fairly – hence the large number of enforcement referrals and other regulatory actions,” said Stephen Bland, who is leading the FSA’s mortgage broker supervision.
As the timetable for the FSA’s TCF implementation strategy is being accelerated, the FSA is racketing up pressure in the face of criticism that its regulation to date has lacked regulatory teeth.
The Council of Mortgage Lenders said the moves towards enforcement should serve as a wake-up call to mortgage brokers that fail to deliver fair treatment to their customers.
It has announced four firms must cease trading until they have reformed their selling practices. Seven more brokers have been referred for enforcement actions that could lead to heavy fines.
A further 10 firms have received a final warning before they too face similar action, and 65 brokers have been ordered to review thousands of mortgages they have sold over the past few years.
The announcement comes after two £10,500 fines were administered to Lawrence Scoffield Mortgages and Council Homebuyers (Midlands and North), and Mortgage Network Solutions’ publicly censure, for similar misconduct.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Hong Kong derivatives regime could drive more offshore booking
Industry warns new capital requirements for securities firms are higher than other jurisdictions
Will Iosco’s guidance solve pre-hedging puzzle?
Buy-siders doubt consent requirement will remove long-standing concerns
Responsible AI is about payoffs as much as principles
How one firm cut loan processing times and improved fraud detection without compromising on governance
Could one-off loan losses at US regional banks become systemic?
Investors bet Zions, Western Alliance are isolated problems, but credit risk managers are nervous
SEC poised to approve expansion of CME-FICC cross-margining
Agency’s new division heads moving swiftly on applications related to US Treasury clearing
ECB bank supervisors want top-down stress test that bites
Proposal would simplify capital structure with something similar to US stress capital buffer
Clearing houses warn Esma margin rules will stifle innovation
Changes in model confidence levels could still trip supervisory threshold even after relaxation in final RTS
BlackRock, Citadel Securities, Nasdaq mull tokenised equities’ impact on regulations
An SEC panel recently debated the ramifications of a future with tokenised equities