Costly home loans being pushed through by some brokers
December 14, 2007
A recent report has shown how many financial brokers in the UK are pushing through home loans that are simply unaffordable.
The report was released by the UK’s financial regulator, the Financial Services Authority, and shows that despite the credit crunch that has wreaked havoc in the financial markets, and despite bad debt levels in the UK, a number of brokers continue to try and push home loans that consumers cannot actually afford repayments on.
According to the FSA some of the brokers that were reviewed as part of the process were operating to ‘well below’ the required industry standard. The brokers concerned have been accused of negligence by the authority, and some have been accused of failing to properly assess the income of potential borrowers before finance is offered, which means that consumers are being offered loans that realistically they cannot afford to make repayments on.
One FSA official stated: ‘During the reviews we saw a number of good brokers who are meeting the required standards and they are being undermined by the negligence or wilful non-compliance of others. We also saw some who despite having some way to go, were willing to engage with us and be helped to improve their performance, which is why we are providing so much guidance following these reviews.’
He added: ‘However there are still an unacceptable number of firms unwilling to change and they are damaging the rest of the industry.’
Following the review a number of brokers have been instructed to take on specialist help to sort out their lending practices, whilst seven of the brokers reviewed have been referred to the FSA Enforcement Division.
14th December 2007
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