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: onset, interest, council of mortgage lenders, finance, prescriptive conduct requirements, mortgage, fsa, Financial Services Authority

Zurich insurance fined over customer data loss

Insurance giant Zurich has received a hefty fine from the UK’s financial regulator, the Financial Services Authority. The fine has been imposed because of a serious breach of security relating to the loss of customer data files. The insurance company is said to have lost the confidential data files of forty six thousand customers.

According to reports the fine that has been imposed by the Financial Services Authority comes to over £2.27 million, even though there was no evidence to indicate that the data in the confidential files had been misused. A range of data was included in the files and this included identity information, details of bank accounts, credit card details, and more.

The FSA said that some of the data work had been outsourced by Zurich to its South African unit, which then went on to lose a back up tape back in August 2008 that was not encrypted. However, the FSA also said that it was a year later when the loss of the data was actually discovered.

Zurich was accused by the FSA of failing to oversee its outsourcing arrangements effectively, and had inadequate control over the data that was being processed. The incident was described as being unacceptable by the FSA, which said that the matter was made worse by the loss being undiscovered for a year,

An official from the FSA said: “Zurich U.K. let its customers down badly. To make matters worse, Zurich U.K. was oblivious to the data loss incident until a year later. Firms across the financial sector would do well to look at the details of this case and learn from the mistakes that Zurich U.K. made.”

Tags: finance, credit card details, regulator, Zurich Financial Services, Zurich, fsa, Insurance, data

New regulations from FSA spark comments from Cable

Spokesperson for the Liberal Democrats, Vince Cable, has recently commented on the changes that have been introduced by the Financial Service Authority with regards to mortgage lending. Read more

Tags: FSA mortgage lending, building societies association, Mortgages, fsa, Association, economy, something, mortgage

Financial complaints soar into their millions

Recent figures that were released have shown that consumer complaints relating to financial services have soared into their millions over the past few years, with data showing that between 2006 and 2008 more than nine million separate complaints were made to financial firms in the UK. Read more

Tags: fsa, United Kingdom, bank complaints, Complaint, Business Finance, financial complaints, loan complaints, mortgage endowments

40 percent bonus increase for FSA staff

In the midst of the ongoing financial crisis the UK’s financial regulator, the Financial Services Authority, has hiked up staff bonuses by a whopping 40 percent, according to recently released reports. Read more

Tags: northern rock. liberal democrats, fsa bonuses, past year, figure, bonus, regulator, fsa, climate

Whistleblower slates FSA over building societies

A whistleblower who has chosen to remain anonymous due to fears over legal action has slated the UK’s financial regulator, the Financial Service Authority, over its lack of action with regards to building societies venturing into risky areas during the credit boom. The FSA has been accused of ‘apathy and complacency’ by the whistleblower, who was a former supervisor with the authority. Read more

Tags: credit boom, Democrat, lord turner, building societies, Financial Service Authority, regulation, treasury, fsa

Progress with PPI not fast enough

Senior officials from the UK’s financial regulator, the Financial Services Authority, have said that progress is not being made quickly enough in the crackdown on the mis-selling of PPI. Payment Protection Insurance has been at the centre of investigations and controversy for some time after investigations revealed that it was commonly mis-sold by lenders and providers. Read more

Tags: Insurance, controversy, payment protection insurance, relation, mystery, fsa, lenders, consumers

£22 million in fines from FSA over 2008

Recently released figures have indicated that over the course of 2008 the Financial Services Authority handed down around £22 million in fines as it continued its crackdown against the mis-selling of payment protection insurance cover and tried to curb rising levels of mortgage related fraud. The UK’s financial regulator has been handing down record fines over the course of the year according to industry officials. Read more

Tags: ongoing problem, fsa, payment protection insurance, time, mortgage, Financial services, financial, disappointment

Lenders issued with deadline to prove fairness

The UK’s financial regulator, the Financial Service Authority, has been contacting lenders that deal with home loans, and has advised them that they have a deadline by which they must prove that they are exercising fairness when it comes to their customers. Lenders will have to prove that customers that have arrears or are facing repossession are being treated fairly, and they have until the end of January to prove that this is happening. Read more

Tags: mortgage, deadline, fsa, loan, fairness

Increase in PPI complaints results in further investigation

According to a recent report a huge rise in the level of complaints being received in relation to PPI, or payment protection insurance, has resulted in calls for further investigation into the sale of this type of insurance cover. This cover is commonly sold alongside credit such as loans and credit cards, and the purpose of the cover is to meet repayments on the debt for a set period of time if the policyholder cannot work due to sickness, injury, or redundancy. Read more

Tags: fsa, industry group, payment protection insurance, redundancy, financial industry, work

Impact on Northern Rock could have been softened

In a recent report the chairman of the Financial Services Authority, Callum McCarthy, has stated that the impact on stricken lender Northern Rock could have been softened had consumers been made more aware of the savings guarantee that was in place from the government. Mr McCarthy stated that many consumers had not been aware of the savings guarantee that was in place, and had they been more aware of this it could have made a big difference to the level of trouble that Northern Rock found itself in. Read more

Tags: bank charges, government, bank of england, nose, fsa, half, flock

Banks need to reduce their mortgage arrangement fees

At a time when borrowing has become increasingly expensive, and when household finances have become tighter and tighter due to the global credit crunch, higher bills, increasing living costs, and higher petrol prices, the UK’s mortgage lenders have decided to deal borrowers another blow by hiking up mortgage arrangement fees, making it even more difficult for the average struggling consumers to take out a mortgage or remortgage. In fact, in the current climate some poor consumers could find themselves facing fees of thousands of pounds to remortgage or take out a mortgage, making the whole process impossible for some who simply cannot cope with that sort of fee. Read more

Tags: UK's financial regulator, council of mortgage lenders, fsa, matter, current climate, issue, Mortgages, extortionate

Be careful over accuracy of some insurance price comparison sites

Over the past few years an increasing number of us have started to use various price comparison sites in order to help us to get better deals and find the most competitive prices on a range of services and products, from utilities and financial products to insurance services and products. Read more

Tags: price comparison sites, nsurance comparison sites, specialise, consumer, British Insurance Brokers Association – BIBA, best deal

Co-op under fire over bank charges

The Co-operative Bank, which described itself as ‘ethical’ has come under fire after announcing a change to the way that it charges on unauthorised overdrafts.

According to experts the new charging structure that will come into force next month will not only push people into debt more quickly, but will also affect lower income customers the most. The changes are to take effect next month, and campaigners state that lower income banking customers could really bear the brunt of the changes.

The UK’s financial regulator, the Financial Services Authority, stated earlier this year that banks could temporarily put the brakes on issuing bank charge refunds until the High Court test case had taken place in January 2008. However, experts state that the new Co-operative Bank charges appear to be in violation of the FSA guidelines. This was because banks were told at that time not to make any material changes or raise overdraft fees.

The fee from the Co-operative Bank will still be capped at £100 per month, but under the new structure many customers will clock up a higher fee more quickly, reaching the £100 limit faster than they would have done over the old structure. It is estimated that close to one million customers could fall victim to this new charging structure.

An official from the Consumer Action Group stated: ‘These clever changes will hit those people who are eking out a living day by day and go over their limit just before pay-day. This happens an awful lot for people on benefits and people like young single mums, who run out of money just at the end of the month. If you are in a vulnerable group this will happen every month of your life. These changes are likely to break the camel’s back for them. The Co-op is just throwing this at them because it knows they have no mobility in their accounts and can’t go anywhere else because of their credit rating. This is an insidious charge based on the knowledge that those affected just can’t walk away.’

Tom Smith
7th December 2007

Tags: fees, coop, financial, charges, capped, bank, cost, fsa

Are you looking for a suitable pension?

Over recent years having a decent pension plan in place has become increasingly important for the younger generation of today. Read more

Tags: retirement, work, save, pensions, stakeholder, fsa

FSA clamps down following mis-sold sub-prime mortgages

The UK’s financial regulator, the Financial Services Authority, has come down hard on a handful of brokers that have been found to be mis-selling sub-prime mortgages in an already volatile financial market.

Chaos has resulted from a credit crunch that was sparked in the sub-prime mortgage sector of the United States. In fact, of the three brokers that have felt the wrath of the Financial Services Authority over this issue, one has been closed down altogether whilst the other two have been fined.

The three small brokers include Homebuyer Securities, which was closed down as a result of mis-selling sub-prime mortgages, the Loan Company, and Next Generation Mortgages. The latter two were fined by the FSA but remain in operation.

According to FSA officials the firms had been offering inadequate sales and advice procedures, and as a result of this had put their customers at risk. The companies were all found to be mis-selling sub-prime mortgages, which are mortgages that are targeted towards those with poor credit and those that are unable to prove a regular income.

An official from the Financial Services Authority stated: “Firms who do not comply with FSA standards taint the entire mortgage industry which is totally unacceptable. Any firms who place their customers at risk of receiving unsuitable advice through inadequate business processes can expect strong action from the FSA.”

According to a recent report a fine of £31,500 was imposed on the Loan Company, which was found to be offering inconsistent information and providing mortgage loans without checking that the borrower could afford to make repayments.

A further fine of £10,500 was imposed on Next Generation Mortgages, which was accused of failing to assess customers’ needs properly and failing to provide warnings about the risks associated with its mortgages.

Alan Wright
25th November 2007

Tags: sub prime, fines, Mortgages, brokers, fsa, Loans

FSA to publish paper on greater transparency

The Financial Services Authority is to publish a paper on greater transparency next year, stating that the aim of the paper is to discuss the “purpose and possible effects of greater transparency”.

The paper is to be published early next year according to officials from the Financial Services Authority. This comes amidst calls from consumer groups for the FSA to name and shame financial companies that do not adhere to its rules.

The FSA has described itself as an “open and transparent regulator”. However, campaign groups state that the regulator must start naming and shaming those that breach its rules and regulations. The Financial Services Authority has come under fire for not naming the companies that fail on mystery shopping exercises or those that are found guilty of mis-leading advertising.

An official from campaign group Which? stated: “We think additional transparency is essential. Keeping things secret doesn’t help the consumer. We need more effective enforcement, the imposition of higher fines and greater use of naming and shaming. If the FSA can hit companies’ reputations as well as their bottom line, it offers a strong incentive to comply with regulation”.

The National Consumer Council agreed, with one official stating: “As a matter of principle, consumers have a right to know whether or not firms comply with the rules and treat customers fairly. Regulators hold much information that would equip people to make better decisions. We hope the FSA’s discussions lead to speedy action – information is a powerful tool in consumers’ hands.”

The Information Commissioner’s Office recently ordered the FSA to name twelve companies that were accused of selling endowment mortgages with inappropriate charges. The FSA is appealing against the Freedom of Information rulings made by the ICO.

Tom Smith
19th November 2007

Tags: clear, charges, fsa, fees, deals, transparancy, mortgage

FSA investigation leads to two arrests

An investigation into a so called boiler room operation by the Financial Services Authority has led to two arrests, according to a recent report.

The Financial Services Authority has been investigating claims of illegal share selling, which are known as boiler rooms, and after raids on a number of homes last week two men were arrested. The raids were carried out by the FSA along with police officers.

The two men arrested are thought to be involved with Universal Management Services (UMS), which is said to be a boiler room, which means a front for illegal share selling. It is thought that consumers that have fallen victim to this scam may have lost over £5 million collectively. Although these boiler rooms are usually operated from abroad, which means that the FSA cannot take action, the agency can act on those based and operated in the UK.

Reports claim that consumers were cold called in order to sell them the shares. Victims are talked into purchasing shares that are actually worthless of worth very little. The company responsible is not authorized by the FSA. The investigations started after a number of consumers complained about the pressure put on them by sales people, who then told purchasers to write cheques out to UMS.

Jonathan Phelan, head of retail enforcement at the FSA, stated: “This the first time we have taken this action and it shows that we will not hesitate to use our powers to protect consumers, including launching criminal investigations where appropriate.” As part of the investigation over £5 million worth of assets have been frozen, according to the report. The FSA also pointed out that there are at least four other companies with similar names in the UK but that they are not related to UMS.

Tom Smith
10th November 2007

Tags: authority, shares, dealings, services, financial, arrests, dealer

FSA to publish new PPI guidelines

The UK’s financial regulator, the Financial Services Authority, is to publish new guidelines in relation to Payment Protection Insurance on its website next year.

Payment Protection Insurance, or PPI, has been at the centre of controversy over the past year, with many claims that this type of insurance was being forced onto borrowers, mis-sold, and in some cases added onto finance deals without the consumers even knowing about it. Banks and lenders make a lot of profit on the sale of PPI, but in many cases customers end up with expensive policies that they cannot even benefit from.

Payment Protection Insurance is designed to help those taking out finance, such as credit cards, loans, and other forms of credit. The idea behind the cover is that consumers will be covered for a specified period in the event that they are unable to work and therefore make repayments due to redundancy, illness, or accidents. However, research was carried out by various agencies, and the industry came under severe criticism for the inappropriate sale of policies amongst other things.

Many people have ended up purchasing PPI that is not suited to their needs as a result of this mis-selling, and the FSA aims to steer customers towards suitable plans based on their needs via the website. Customers will be asked a number of questions on the site, and will then be able to view a choice of suitable policies so that they do not end up purchasing inappropriate PPI.

In addition to helping consumers to find the right PPI policies for their needs, the FSA has also promised that it will be taking far more stringent action and imposing far higher fines on companies that are found to be mis-selling Payment Protection Insurance in the future.

Tom Smith
4th November 2007

Tags: investigation, fsa, credit, ppi, payment, Insurance, cards, Loans, protection, misselling

FSA investigating banks’ stability

Following the recent turmoil in the financial markets, which has spread from the sub-prime sector in the United States, the Financial Services Authority is to launch an investigation to review the stability of mortgage lenders. Read more

Tags: fsa, bradford & bingley, billions, banks, fsa investigation, loan, northern rock

Nationwide stops PPI sales

The largest building society in Britain, the Nationwide, has stopped sales of Payment Protection Insurance with its financial products, after admitting that customers were not being properly advised with regards to PPI by staff members.

Payment Protection Insurance has been at the centre of controversy for some months after it was found that customers were being pushed into purchasing this non-compulsory cover, and that the cover was often being mis-sold inappropriately so that customers ended up purchasing a costly policy that they would never be able to benefit from.

The Financial Services Authority has been running a long term investigation into the sales of Payment Protection Insurance for two years, and is in the final phase of its review and investigation. The cover is designed to assist those that cannot keep up with repayments on their financial commitments due to accidents, illness, or redundancy, and is sold with products such as credit cards, loans, and other financial products that may need protection.

However, the review revealed that in many cases sales staff were mis-selling this policies, making the customer think that they cover was compulsory, and in some cases even adding PPI without the customers’ knowledge. This has led to a real crackdown on the sales of PPI after many people ended up purchasing policies that they were either not eligible to claim benefits on or that they were not even aware that they had purchased.

A Nationwide spokesman stated that the halt in sales of PPI is a temporary one, adding: ‘We did some mystery shopping and weren’t satisfied the sales processes were as robust as they should be, so they have been halted temporarily.’

Tom Smith
27th September 2007

Tags: cover, cost, policy, payment, fsa, Insurance, protection, benefit, ppi

Free banking under threat, says BBA

Banks in the UK might introduce wide-ranging extra charges on current accounts, the British Bankers Association (BBA) said today.

The BBA said that the charges, likely to be fiercely contested by consumer groups, will bring the UK into line with regulations in the US, Australia and Europe.

Charges would include fees being levied to write cheques, to pay bills by direct debit and even to use cash machines.

According to a BBA, spokesman, the new fees would “follow patterns abroad where banks charge for transactions such as ATM use, direct debits and standing orders, in addition to an annual fee.”

The statement could be seen as a reaction to the bitter battle banks are currently locked in with customers and the Office of Fair Trading (OFT), over what is seen as their “unfair” charging procedures.

The Financial Services Authority (FSA) is currently investigating banks’ overdraft charges, and will release their findings in the autumn.

Tags: Fair Trading, standing, today, overdraft, bitter battle banks, financial, fsa, Banking

Post Office wants end to aggressive PPI tactics

The Post Office is calling for aggressive payment protection insurance (PPI) sales tactics to be stamped out.

It follows the news that credit card company Capital One has agreed to pay a fine of £175,000 following an investigation by the Financial Services Authority (FSA).

The firm was lambasted for its poor sales and administration in regards to PPI and the Post Office has welcomed the FSA’s decision to issue a fine.

However, it also calls upon the industry as a whole to improve its standards or risk losing the trust of customers.

“If we want customers to trust our industry, these aggressive sales tactics must cease to allow for a more transparent and fairer marketplace,” said Claire Oldstein, head of communications at the Post Office.

“The Post Office has long been calling for an open market for PPI sales, where providers are honest with customers that other, cheaper standalone products are available.”

Ms Oldstein also pointed out that few customers know a great deal about PPI, with many unaware that they even have it.

In addition, aggressive sales tactics are leading to many people feeling as though they have no choice but to take out a PPI policy when they get a loan or credit card, even though this is most certainly not the case.

PPI is a voluntary insurance which is designed to protect borrowers should they be unable to work and cannot afford the repayments on their loan.

Many borrowers find that it gives them peace of mind, but it is recommended that you shop around for the best deal and do not feel as though you must take the policy offered by your lender.

Tags: fsa, PPI policy, mortgage, capital one, administration, authority, credit, post office

GECB fined over PPI

GE Capital Bank (GECB) has been fined by the Financial Services Authority (FSA) for failing to have adequate systems and controls in place for selling insurance.

The bank was hit with a £610,000 fine following an investigation into payment protection insurance (PPI) by the FSA.

GECB works in providing credit finance through store cards, credit cards and sales finance. The firm has been found guilty of treating customers unfairly.

“Millions of people take out store cards every year,” said Margaret Cole, director of enforcement at the FSA.

“They need to know that PPI is almost always optional and should consider whether they need it before signing up.”

GECB has been punished for failing to provide adequate information to consumers regarding PPI and failing to retrain staff after it was highlighted that they were not complying with sales procedures.

The FSA has warned that GECB will not be the last firm to come under scrutiny regarding PPI.

“Our focus on Payment Protection Insurance will remain very high this year,” warned Ms Cole.

“We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly.”

GECB has committed to taking action to redress the highlighted issues, which resulted in the fine being reduced from £870,000.

Tags: selling insurance, consumers regarding ppi, adequate information, fsa, payment protection insurance, Insurance, finance, sales procedures.the fsa

Treasury Announces Investigation Of Travel Insurance Mis-Selling

By and large, Brits are a conservative consumer group.  As such, millions of us will gladly pay a relatively small premium to take-out a travel insurance policy before we go away on our holidays.  If you happen to have been one of the millions of Britons who have also experienced the reality of trying to claim on a travel insurance policy, only to find the insurance company worm its way out of the deal under one of the many exemptions, then you may well be delighted to hear that the Treasury has announced that it going to commence an investigation into the manner in which travel insurance is sold in the UK. 

Annually, we Brits spend over £1 billion a year on travel insurance premiums.  We do it because we believe we will be covered for almost all eventualities should something go wrong – either prior to the holiday itself or while on holiday.  In many cases, however, the harsh reality is that the numerous “get out” clauses that travel insurance policies customarily contain means the reality of being refunded, or even being compensated, for an event we thought was covered in our travel insurance is a far cry from what we may have been lead to understand when being sold the policy in the first place.

As such, of particular interest to the Treasury’s investigation will be the old gripe of whether or not travel insurances that are sold as part of a “holiday package” are being mis-sold.  While standalone insurance policies are regulated by the Financial Services Authority (FSA), travel insurance that is sold as part of a holiday package is not. 

Commenting on the current practice of possibly mis-selling travel insurance as part of a travel package, Economic Secretary Ed Balls said, “We need to find out whether travel insurance sold with a holiday is being mis-sold and if we need to educate consumers to consider the cover they want and ensure they are properly informed.”  This comes after Balls discovered that almost half of the UK’s 20 million annual travel insurance policies don’t cover terrorist attacks.

Although travel insurance policies sold by travel firms are not currently regulated, meaning that aggrieved policyholders have little or no right of redress against the travel firm, the announced forthcoming investigation by the Treasury may be just the wake-up call the industry needs to get its house in order or follow the fate of other financial service providers whose practices and activities have recently been curtailed following high profile investigations.

Tags: travel, fsa, commission, uk, Insurance, premium