FSA clamps down following mis-sold sub-prime mortgages
November 25, 2007 by admin
Filed under News, News-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
