Brokers are pushing thought unaffordable home loans
According to a recent report released by the UK's financial regulator the Financial Services Authority many brokers are pushing through home loans that are simply unaffordable.
This is despite the credit crunch that has swept across the UK and other parts of the world as a result of problems in the United States sub-prime mortgage market. The financial watchdog states that many brokers have been pushing these loans through without proper earnings information.
The regulator has accused these brokers of being negligent, of undermining the industry, and of failing to meet required standards. The reports claims that many brokers are accepting dodgy earnings information from would-be borrowers, and are enabling them to take on loans that they realistically cannot afford to repay. During the course of the investigation, the FSA discovered that some brokers were operating to standards that were 'well below' the required standards in the industry.
FSA official state that in some cases managers were failing to monitor performance to ensure that customers were being treated fairly. Following the investigation seven firms were referred to the FSA Enforcement Division, and a number of others may be referred. Another 65 firms have been instructed to either employ specialists to sort out these issues or to review their practices.
An FSA official stated: '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. We also saw some who despite having some way to go, were willing to engage with us and be helped to improve their performance, which is why we are providing so much guidance following these reviews.'
He added: 'However there are still an unacceptable number of firms unwilling to change and they are damaging the rest of the industry.'
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