FSA voices concerns over recklessness of some lenders
The UK’s financial regulator, the Financial Services Authority, has commented on the extent of the recklessness of some of the UK’s lenders.
The regulator stated recently that some lenders had been so reckless with their lending that between 30 and 60 percent of their borrowers had now fallen into arrears. The concerns of the FSA were voiced by Jon Pain who was speaking out at the annual conference of the Council of Mortgage Lenders.
Mr Pain said that this recklessness was part of the reason why the FSA has been bringing in new rules and regulations to further restrict mortgage lending and promote more responsible practices by lenders. However, the chairman of the Council of Mortgage Lenders had his own concerns to voice, claiming that the restrictions that have been brought in by the FSA are too tough.
The chairman, Matthew Wyles, said that he was worried that regulators saw lenders and intermediaries as the ‘drug dealers at the school gates’ of the mortgage market who were only interested in getting people hooked and making lots of money.
He added that the FSA was going too far with its regulations, and that it was wrong of them to brand self certification mortgages as liar loans because people that generally took out these loans were often in complicated situations rather than being dishonest.
Speaking about the decision to stop self certification mortgages Mr Pain said that this would not lock three million self employed people out of the mortgage market, as had been suggested. He added that genuine self employed people should have a way of proving them income anyway, and that the decision to stop self cert mortgages was based on ensuring people didn’t get lumbered with loans that they could not repay.
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