Mortgages: Brokers still failing
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Several mortgage brokers 'still well below standard'
Monday, 26 Nov 2007 15:02
Several UK mortgage brokers are still operating well below standard, with customers not being treated fairly and senior management not controlling their firms' performance.
Market reviews from the Financial Services Authority (FSA) reveal some improvements have been made by mortgage brokers - but of the 65 firms forced to take out business reviews, seven have been referred to enforcement and a few have been forced to stop trading until they rectify failings.
Failings uncovered included firms being ready to go ahead with a mortgage despite doubting the accuracy of financial information given by customers.
Further failures were noted in assessing affordability, overseeing advisors and stopping cases of fraud and money laundering.
"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," said Stephen Bland, FSA retail intermediary sector leader.
"There are still an unacceptable number of firms unwilling to change and they are damaging the rest of the industry.
"We found some firms willing to offer mortgages they know to be unaffordable and to accept self-cert business even where they had concerns the financial information provided by the customer was implausible."
Michael Coogan, director general of the Council of Mortgage Lenders (CML), said: "After three years of regulation, the FSA is right to expect its regulatory standards to be in place across the whole market. These findings are a wake-up call to those brokers who are behind the pace.
"But the FSA also needs to make sure that it sets out its expectations clearly and unambiguously, which does not always happen."
The FSA has now issued case studies and examples of good and poor practice to aid mortgage brokers improve their service.
The Association of Mortgage Intermediaries (AMI), which represents mortgage brokers, has spoken out to claim some improvements have been made.
“It is important to note many areas of strength were discovered during this review, and again we support the FSA for highlighting this," said AMI director, Richard Farr.
"It is crucial in such a turbulent market we highlight positives and not just focus on a small minority of failings."
He added: "The significant majority of intermediaries are honest hardworking individuals, however a small few serve to damage the reputation of our industry."