View more on these topics

FSA may block sales of distressed mortgage books to unregulated firms

FSA managing director of retail markets Jon Pain said the FSA will look to prevent distressed mortgage books from being sold to unregulated firms.

Speaking at the FSA’s mortgage conference today, Pain said he expects these types of sales to increase.

He said: “We have already seen some books sold to unregulated firms and expect sales to increase as more wholesale-funded lenders struggle to manage their arrears. Our primary concern here is consumer protection and what happens when books are sold on.

“So we will look at what needs to change to avoid this happening again and prevent securitisation being used as a vehicle to allow lenders to take on unacceptable levels of risk.”

Pain also said the FSA is considering introducing a requirement for income verification for all mortgages, with lenders required to verify the plausibility and authenticity of the documentation provided by the customer before an offer is made.

He added: “Or should we encourage lenders to lend responsibly through our capital requirements with holders of higher-risk loans having to hold more capital against these than they would for lower-risk loans?”

Pain said full RDR-style changes for mortgage distribution would “probably not be proportionate” because many of the problems exist mainly in the specialist areas of the market.

He said: “Secondly, mortgages are much simpler than investment products as you generally know what you’re getting in advance.

“We are though assessing the extent to which remuneration structures in the market, in subprime in particular, have led to a sales bias, product bias, or to churning that has left consumers with poor value or unaffordable mortgages.”

Recommended

Health - thumbnail

Healthcare predictions for 2015 from Jelf Employee Benefits

The continuing fall-out from the Competition and Markets Authority’s (CMA’s) review, the rise of the private GP and digital engagement will be the primary focuses in the private healthcare industry during 2015, according to Iain Laws, managing director, healthcare and group risk, at Jelf Employee Benefits.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com