The FSA has ordered more than 200 sub-prime mortgage brokers to withdraw or amend misleading ads.
Some of these firms have been referred to the FSA’s enforcement division for further investigation as many customers were found to have been given a sub-prime deal where there was no evidence of impaired credit.
The FSA says that where promotion rules were flouted, there were usually wider compliance problems. Its investigation is part of wider work on the adverse sector and the results will be published next summer.
The Association of Mortgage Intermediaries is urging its members to use its factsheet on financial promotions for sub-prime mortgages.
FSA retail themes director Vernon Everitt says: “Financial advertising must be clear, fair and not misleading, leaving people with a balanced picture of the key pros and cons. This is particularly the case for brokers in the sub-prime market, where people are making one of the most important financial decisions of their lives. We need to see standards here rising and fast.”
Mortgages plc head of marketing Julian Wells says: “It is no surprise this has happened and it will send shockwaves throughout the market as enforcement could mean your business is in danger.”
John Charcol senior technical director Ray Boulger says: “The sub-prime sector is awash with dubious companies peddling heavily overpriced mortgages, often with exorbitant fees and excessive early repayment charges to people who can least afford to pay them.”