Financial regulator defends plans over mortgage lending

The UK’s financial regulator, the Financial Services Authority has recently been defending its plans and proposals with regards to the mortgage and property markets, stating that something has to be done in order to avoid another crisis like the one seen over the past couple of years since the onset of the global financial crisis.

The FSA has taken a lot of flack from group such as the Council of Mortgage Lenders over the plans and proposals that it made relating to the mortgage sector. The regulator wants to put an end to the interest only mortgage, which the CML believes will eliminate any chance of some people getting onto the property ladder. It is also thought that plans to reduce the LTV levels that can be offered by lenders could further decrease affordability for potential buyers.

The FSA has now said that individual affordability needs to be carefully assessed to help the industry from experiencing the chaos that has been seen over the past couple of years. He said that in the past it was assumed that lenders were being responsible when it came to mortgage lending and taking risks, and that’s why these measures had not been required in place at the time. However, he added that times had changed especially in the financial market and measures were now needed to increased security.

She said: “We believe that a robust and effective assessment of individual affordability has to underpin any sustainable lending model. When developing the current regime, we assumed that lenders would have a prudential self-interest to manage their credit risk responsibly and, therefore, prescriptive conduct requirements were not required. That has been shown to be a mistake and we are therefore proposing to be much more explicit about the standards we expect.”

Tags: council of mortgage lenders, onset, fsa, interest, prescriptive conduct requirements

Interest only loans do serve a purpose

An industry expert has stated recently that interest only loans do serve a purpose and can prove invaluable for some borrowers. Her comments came as lenders clamp down on interest only loans and the UK’s finance regulator, the Financial Services Authority sets up new proposals that could wipe out these interest only loans altogether.

The FSA is putting together proposals that would see interest only mortgage loans coming to an end, with lenders being told that they will have to continue asking for large deposits and other measures being proposed that could seriously affect the ability of many people to get a mortgage.

Paula John from Your Mortgage said that the FSA was right in trying to put together regulations to stop irresponsible lending and reduce the risk of consumers taking out loans that they could not afford to repay. However, she also said that it was important to take into consideration that interest only loans did serve a purpose and could prove invaluable for some people.

Her comments came after a statement was made by the Intermediary Mortgage Lenders Association, which said that if the FSA regulations were put into force interest only loans could be made obsolete.

Ms John added that whilst it was right of the FSA to express concern over borrowers taking on mortgages and loans that they could not repay it was also a valid point by the IMLA that it could be a mistake to get rid of interest only mortgages altogether because some people could really benefit from them.                               

She stated: “I think [the IMLA] is right in sounding a warning bell that we could throw the baby out with the bath water and see the end of interest-only mortgages altogether.”

Tags: finance, mortgage, business, Interest-only loan, mortgage loans

Mortgage drought could affect many people

Industry experts have said that under current plans that have been proposed by the UK’s financial regulator, the Financial Services Authority, many people could be facing a mortgage drought that could leave them unable to get the mortgage finance that they need in order to get onto the property ladder.

The mortgage market is already very restricted, as it has been since the onset of the global financial crisis several years ago which almost brought the banking and financial systems to their knees. However, experts from the Council of Mortgage Lenders have said that things could get even worse under new rules from the FSA.

The Council of Mortgage Lenders has said that if these regulations had been in place over the past four years over 50 percent of mortgages that were granted over this period would have been refused, causing huge problems for those that were looking to buy a property and get onto the property ladder.

The CML claims that this would have equated to around four millions additional mortgage loan rejections if the FSA had its regulations in place in 2005. The group said that this shows just what a negative impact the rules could have in the current financial climate. A review by the CML suggests that under the new proposed regime millions more people a year could be turned down for a mortgage loan.

Figures show that the number of mortgage approvals in the UK have already plunged, with numbers having fallen to around 50,000 per month compared to 135,000 a months before the credit crisis hit. This has been made worse due to the strict restrictions that banks have put in place when it comes to lending, as well as the higher deposit levels being demanded.

Tags: Mortgage loan, mortgage, UK's financial regulator, property ladder, market, Financial Services Authority, financial, council of mortgage lenders

Thousands get extension to complain about PPI

It has been reported that tens of thousands of consumers who may be looking to make a complaint about PPI, or Payment Protection Insurance, have been given an extension to the deadline to make their complaint by the UK’s financial regulator, the Financial Services Authority.

The normal deadline for PPI complaints in relation to being mis-sold the cover is six months. However, the FSA has extended the deadline for five months for those whose complaints were rejected by firms between November 28^th last year April 28^th this year. It is thought that around fifty five thousand people could benefit from the extension.

The additional five month period that has been granted by the FSA means that the tens of thousands of people whose complaints were turned down between November last year and April this year now have until towards the end of October this year to complain.

There was a delay in the FSA’s own plans whilst it decided how companies should be made to deal with PPI complaints. However, the regulator did not want consumers to suffer as a result of the delays, and this is why it has decided that it should extend the complaint deadline.

PPI has been at the centre of controversy for some time, and there have been investigations carried out showing that many people were mis-sold these policies, which were often sold to those that did not want them or were under the impression that they had to have the insurance cover in order to get the finance that they wanted.

One consumer said: “I’m glad that the FSA decided to extend the deadline, as otherwise I would have missed out on my chance to complain and possibly get a refund on cover that I believe to have been mis-sold to me.”

Tags: Financial Services Authority, payment protection insurance, finance, year, mortgage, ppi

Packages bank accounts could be mis-sold

Over recent years many people in the UK have upgraded their current accounts with their banks, and have signed up to a packages bank account. Read more

Tags: Insurance, packages bank account, regular bank account, packaged bank accounts, Financial Services Authority

Banks need to do more to help struggling customers

It has been claimed by the Financial Ombudsman Service that banks in the UK need to take more action to help consumers that are in dire straits with their finances and who need help to keep them afloat financially. Read more

Tags: Financial Services Authority, overdraft, debt management, bank, turned away, financial assistance, Financial Ombudsman Service, customer

Are we home and dry when it comes to repossessions?

The UK, like many other countries, has been through a tough time over the past couple of years in terms of finances, and one of the side effects of the financial crisis has been the soaring level of repossessions that have taken place. Read more

Tags: financial crisis, homeowners, Financial Services Authority, mortgage, personal finance, repossession

10 percent of Brits affected by scams

It has been revealed by the Office of Fair Trading that around 10 percent of Brits have been affected by scams in the past. This equates to around four million adults who have said that they have responded to what turned out to be a scam. Worryingly whilst 50 percent of those that had fallen for a scam had lost more than £50 to the fraudsters around 5 percent had lost more than £5000. Read more

Tags: fraud, Advance-fee fraud, Ethics, office of fair trading, Deception

FSA cracks down on sale and rent back schemes

Over the past few years an increasing number of people have had to turn to sale and rent back companies to try and get themselves out of a sticky situation with their homes. Read more

Tags: Real property law, Renting, finance, sale and rent back, home insurance, mortgage, Real estate, Economy of the United Kingdom

FSA to monitor refunds from banks

It has been reported that the UK’s financial regulator, the Financial Services Authority, is to closely monitor refunds that are made by banks in instances where the consumer states that he or she has not authorised a transaction. Regulations that were brought in last November required banks to make immediate refunds to consumers for transactions that they claim that they had not made unless there was clear evidence that the consumer was involved in fraud or had been reckless. Read more

Tags: Financial Services Authority, bank, hsbc, ATM, HSBC Holdings PLC, Economy of the United Kingdom

FSA slated over its treatment of lenders

According to recent reports the Council of Mortgage Lenders has accused the UK’s financial regulator, the Financial Services Authority, of treating banks and other lenders like ‘drug dealers at the school gates’. Read more

Tags: Financial services, Financial Services Authority, Economy of the United Kingdom, Matthew Wyles, mortgage

Virgin Money applies to become bank

Virgin Money has put in an application to become a fully fledged bank according to a recent report. The company, headed by Sir Richard Branson, already offers a number of financial products, but now wants to become a full service bank and has put in an application to do so. Read more

Tags: crunch, banking service, virgin money, Virgin, virgin money bank

Is it time to lay off the banks?

Nobody can deny that over the past year and a half the UK’s banking industry has taken a real battering from all sides, with consumers, government officials, regulators, and campaign groups having really laid into the banks, accusing them of everything from irresponsible lending practices to failure to control bonus levels paid to executives. Read more

Tags: huge bonuses, good bashing, Financial Services Authority, certain staff, banks, Ethical banking, Lord Mandelson

Homebuyers may have to put down 15 percent of property value

It has been revealed that the homebuyers of the future in the UK may have to put down a deposit of at least 15 percent of the property value, which means that an increasing number of people may find themselves priced out of the market because they do not have the deposit level that is being demanded. Read more

Tags: low deposit mortgages, no deposit mortgages, 15% deposit mortgages, Financial Services Authority, Mortgages

Repossessions increase by 92 percent in a year

According to a recent report the number of homeowners that were losing their homes through repossession in the third quarter of last year rocketed by 92 percent. Read more

Tags: council of mortgage lenders, mortgage debt, Financial Services Authority, repossessions, total mortgage debt

Saving guarantee safety net increased

The government has recently announced that saving guarantee safety net in the UK is to be increased to £50,000. Previously the 100% guarantee on savings applied to only the first £35,000 of savings with most financial institutions, and this compensation comes from the Financial Services Compensation Scheme. Prior to the Northern Rock fiasco last year the savings guarantee was far lower. Read more

Tags: savings guarantee, Trotskyists, Financial Services Authority, hector sants, Northern Rock fiasco

The ‘bulk’ of mortgage lending will be re-mortgaging

With fewer people applying for mortgages for new homes, an expert has predicted that the “bulk” of this year’s mortgage lending will be in the re-mortgaging area. Read more

Tags: The, mortgage, first time buyer, Pauline McCallion, Financial Services Authority, year's mortgage lending, Business Finance, attractive mortgages

Mind: Debt can exacerbate mental health problems

Consumers who suffer from mental health problems can find their health deteriorates when they get into debt and receive letters from financial institutions, the national association for mental health, Mind, has said.

A spokesperson for the organisation said that people in debt are not just receiving one letter a week, but a barrage of phone calls throughout the day from different people, which can feel “quite intense” for some people.

Recent research by Mind found that the biggest reasons for people getting into problem debt were mental health problems (66 per cent), living on a low income (66 per cent) and difficulties in managing money (58 per cent).

Mind said that it has been working with the Financial Services Authority to change the way in which lenders treat their customers who have mental health problems and fall into debt.

“We are calling on banks to keep to… a code of practice, about responding appropriately to things like missed payments and treating people who are worried and have anxiety and depression appropriately,” added the spokesperson.

Tags: Bipolar disorder, Alternative medicine, cent, financial, authority, anxiety, Financial Services Authority, organisation

Consumers need to budget more as the cost of living increases

As the cost of living increases consumers need to be more aware of ways to budget to make their cash go further, one financial expert has advised.

Because of this Norwich and Peterborough Building Society (N&P) has asked its customers to provide their tips on how to budget effectively.

Advice includes budgeting for utility bills, putting aside money for events such as Christmas into a separate account, unplugging all electrical items and ensuring they are turned off, as well as planning a weekly food menu and basing a shopping list around this.

Gary Lacey, group product manager at N&P, said it is refreshing to see that simple tips, such as changing shopping habits or saving electricity can prove the most popular.

“By adhering to just a few of the tips our customers suggested, families can save little and often, which, in the long run, could add up to a decent amount of money,” he said.

Meanwhile, further research from N&P revealed that the majority of financial decisions for a family are made as a group.

Tags: Financial Services Authority, northern rock, food, shopping habits, expert, majority, utility, Peterborough Building Society

Thousands are struggling with mortgages claims charity

Homeless charity Shelter has called for the government to do more to assist homeowners struggling to meet mortgage repayments after it revealed the number of calls it received had risen by 700 per cent.

The charity said that calls from concerned homeowners had leapt from 10,000 to 80,000 over the past 12 months.

Adam Sampson, the charity’s chief executive, said: “Shelter has seen a massive increase in people coming to us with mortgage problems, and with repossessions set to rise throughout this year we simply haven’t got the resources to help everyone.”

He added that the government needs to work with the Financial Services Authority to repair the “broken state safety net” to ensure that if people do face difficulty there is somewhere to turn for advice.

In its ‘Mortgage and Repossessions’ report Shelter also calls for new guidance to be supplied to judges in county courts so that a tougher line is taken against mortgage lenders who treat customers unfairly.

The recommendations from Shelter come after the FSA warned that as many as one million homeowners could face repossession as the economy slows down.

Tags: Financial Services Authority, authority, face difficulty, county, United States, Mortgages, 12 months, difficulty

HSBC reveals extent of charge costs

HSBC reveals extent of charge costs

In another twist to the ongoing dispute between consumer groups and British banks over allegedly “unfair” charges such as overdraft fines, a leading high street bank has revealed for the first time the financial damage it has sustained over the issue.

The figures, released yesterday by HSBC, show that more than £100 million has been paid back, reflecting the scale of customer rebellion against the charges.

HSBC chief executive Michael Geoghegan said that “the size of the refunds that we have made demonstrate our commitment to treating our customers in a fair and transparent manner.”

Last week, the Office of Fair Trading (OFT) officially launched legal action against eight UK banks.

Mr Geoghegan also welcomed this news, which he said would “achieve legal clarity and a resolution for our customers and our business”.

The banks were granted a temporary reprieve as the Financial Services Authority (FSA) agreed to waive all charges until the conclusion of the case, which will come later in the year.

HSBC has recently announced an 11 per cent rise in profits so far in 2007 compared with the same period in the year before, totalling around £7 billion.

Tags: consumer groups, scale, Financial Services Authority, costsIn, fair, overdraft

Overdraft claimants’ cases put on hold

Bank customers’ hopes of reclaiming what they see as unfair and excessive charges for going overdrawn took a serious hit today.

Industry watchdog, the Financial Services Authority (FSA), announced that banks would be allowed to only give money back when their investigation was finished, which is anticipated to be towards the end of this year.

Previously, it was agreed that high street banks and the Office of Fair Trading would allow courts to decide on whether the fees were illegal or not.

The British Bankers’ Association (BBA) welcomed the news in a statement “Banks believe the fees customers pay for unarranged overdrafts are fair and clear. However, this is clearly an issue where customers, as well as the banks, would welcome legal clarity.”

The OFT strongly disagrees with this position, saying that banks are contravening unfairness laws and that it is “seeking to establish this legal principle in court”.

Banks have paid out an estimated £200 million this year to customers claiming repayment of the controversial charges, which have affected some of the most vulnerable, debt-ridden customers in the UK.

The backlash against the charges has been immense, with almost two million downloadable claims forms being accessed online by irate customers.

Tags: debt-ridden customers, Overdraft claimants, financial, Financial Services Authority, hit today.Industry watchdog, two million, office, GBP

Take action against anti-social behaviour

Britons are being encouraged to take measures to counter the threat of anti-social behaviour in communities around the country.

Research by insurer Zurich estimates that £1 billion of damage has been caused to properties and possessions in the last five years, with 30 million adults having been affected by such incidents.

The study reveals that a fifth of respondents have reported cases of graffiti on their properties.

Over one in ten Britons also note that front doors or walls have been vandalised, with abandoned cars also being identified as problematic.

Zurich says that two-fifths of people say they feel powerless at the hands of vandals, while over a quarter say it has impacted upon their quality of life.

Martin Hall, head of personal lines underwriting at Zurich Insurance, said: “To help minimise the impact of anti-social behaviour, we believe there are some simple changes that homeowners can make to reduce the chances of falling victim to vandals.”

Installing an effective home and car alarm system might be a good idea as well as making sure garden gates and shed doors are securely locked.

Tags: damage, fifth, Martin Hall, 1 billion, Financial Services Authority, action, threat, front doors

Home insurance customers ‘pay more when loyal’

Loyal customers to home insurance companies are being penalised as firms battle out to cheapen prices rather then to extend services, according to a new report.

Defaqto, a data collection company, has found that rather than retaining established customers through extending cover or offering new and improved services to customers, firms would rather lower prices to attract new business.

This means that newer customers pay far less than loyal customers through various cash back deals, which have risen in frequency by 60 per cent in the last 12 months.

“It hardly seems in keeping with the Financial Services Authority’s rules for Treating Customers Fairly that two customers with exactly the same risks should pay markedly differing amounts for their policies,” said Brian Brown from Defaqto.

“It would appear that increasing loyalty never goes unpunished and rewards are only available for the disloyal.”

He recommends that consumers double-check their home insurance deals to see that any new purchases are still covered and that they still have a competitively-priced deal.

Tags: Financial Services Authority, Insurance, data collection company, home insurance, company, Business and Economy, customer, competitively-priced deal

Just 96 mins to choose a house

Home buyers are being warned to take more time over choosing the home of their dreams.

New research shows that many buyers spend just 96 minutes viewing a property before taking out a mortgage on it.

This period of time is vastly smaller than how long we spend deciding where we will take our annual holiday, with the average person spending 139 minutes choosing a destination.

In light of these figures, Abbey Mortgages is warning buyers that they should take more time when deciding on a new home or they may be stung by unexpected problems in the future.

“It really is crucial that home-buyers do as much research as possible before making an offer on a new property. Moving is stressful enough, without having to worry about nasty surprises when you arrive at your new home,” commented Nici Audhlam-Gardiner, head of mortgages at Abbey.

According to the mortgage lender, many homeowners have looked back at the buying process that they went through and have regrets.

Of those surveyed, 21 per cent said that they found the decor in the house had been fitted poorly, 14 per cent suffered from nasty neighbours and six per cent had difficulty finding a parking space.

Abbey is offering a mortgage which covers all upfront costs, meaning new homeowners do not have to worry about any nasty surprises.

This deal may benefit many buyers but anyone considering purchasing a property should ensure that they shop around to find the best deal for them and must not allow themselves to be rushed into a decision.

Tags: mortgage, destination.In light, choosing, upfront costs, abbey mortgages, Financial Services Authority

Millions not claiming unfair charges

Millions of people who have been stung by unfair bank charges are yet to claim their money back.

That is according to Which? after it carried out research that found almost two thirds of people have not even tried to get their hands on the money which is rightfully theirs.

Which? asked 2,200 consumers if they had attempted to claim the money back and many said they had not, however, of those who did, a massive 85 per cent said that they were successful.

The consumer champion reckons that this figure would be closer to 100 per cent if people were more persistent after initially being denied a reimbursement by their bank.

“Claiming back unfair bank charges is a simple process that won’t take up hours of your time,” claimed Emma Bandey, personal finance campaigner for Which?

“If your bank does not co-operate, you should refer the case to the Financial Ombudsman Service (FOS) as so far the banks have chosen to settle all cases referred to FOS.”

The most popular reason for not claiming back the charges is fear of what the bank’s reaction may be.

Many consumers are concerned that their bank may close their account and demand full repayment of any overdraft or loan.

A large number of those who have claimed their money back have not been pleased with their bank’s attitude.

In total, 25 per cent of those asked said that their bank was unhelpful and unresponsive with many having to chase them for a response.

Tags: money back.That, unfair bank charges, loan, overdraft, Financial Services Authority, Financial Ombudsman Service, consumer, response

Potential PPI refund

Consumers could save themselves large sums of money by seeking a better deal on their payment protection insurance (PPI) for a personal loan.

That is according to the Post Office, which says some borrowers may find that they could save thousands of pounds.

The firm points out that PPI that is sold alongside a loan is normally added to the total sum of the amount borrowed, meaning the consumer will pay interest on the insurance.

Customers are now being urged to challenge their lender and could find that they receive a refund for the interest charged.

“The refund could be substantial, so people shouldn’t miss out,” said Claire Oldstein, head of communications at the Post Office.

“Banks and loan providers are in an ideal position to sell insurance with their loans, but customers should challenge them to find out what the true cost of their payment protection is.

“By comparing this to standalone policies, customers can see for themselves that better value deals are available,” she added.

The Post Office has recently called for an open PPI market in response to an investigation by the Office of Fair Trading.

The organisation wants it to be mandatory that consumers are told by lenders that they can get better or cheaper policies by shopping around.

Tags: consumer, head, Financial Services Authority, total sum, organisation

FSA makes MEAF statement

The Financial Services Authority (FSA) has released a statement on mortgage exit administration fees (MEAF).

The organisation was responding to recent concerns which have been raised about MEAFs which have been unfairly increased.

It means that some consumers have been charged higher exit fees than was originally agreed and has made switching mortgage lender and paying a mortgage off early more difficult.

FSA officials have now said that lenders have four options, one of which they must settle on by February 28th.

Lenders can either charge no MEAF whatsoever, charge the original MEAF, a revised MEAF or the current increased MEAF.

“We expect that these measures, agreed with the Council of Mortgage Lenders, will stop borrowers from being surprised by unexpected increases in these fees,” said Clive Briault, managing director of retail markets at FSA.

“People will now know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be increased fairly.”

FSA is also calling for previous customers to be given the same treatment as new customers, meaning if a customer has paid a higher MEAF than current borrowers, he or she should be refunded.

Tags: meaf, customer, Financial Services Authority, idea, council of mortgage lenders, administration, mortgage lenders