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‘HMRC should allow lenders to check income data’

Bennett
Bennett: ‘We have demonstrated that lenders have saved a lot of money’

Brokers and lenders have called on the Government to push ahead with the Labour administration’s plans to allow lenders to use HM Revenue & Customs’ data to verify income.

Panellists at a Money Marketing round table said a robust system would allay many industry concerns about the FSA’s new income verification requirements.

Nationwide head of mortgage strategy and policy Andrew Baddeley-Chappell said: “The Government should implement using HMRC data on how much people earn to verify borrowers’ income. It seems like a joined-up process because there are two opposing forces – people want to keep their earnings low to pay low tax and they want to keep their income high to get a mortgage.

“If the Government wants to maximise its tax revenue and minimise irresponsible lending, this is something that would be self-financing. There would be benefits to customers, the Government and lenders.” PMS executive chairman John Malone said the move could help 10 million people who find it difficult to prove their income.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 23rd July 2010 at 2:58 pm

    The government wants to maximise its tax revenues (fair enough) and has also promised reform of the annuity trap to which pension funds are shackled. The two are strongly interlinked, so bear with me.

    The result of genuine reform by way of removing this shackle and increasing the income generating capacity of pension funds would be to increase ~ probably significantly ~ the amount of tax assessable retirement income flowing into the economy. Everyone would benefit.

    But all we have seen from Mark Hoban is a bit of worthless tinkering with a manifestly broken machine. The obligation to buy an annuity has gone, but all the alternatives are still governed by GAD rates.

    The government has promised one thing but in practice has, in this case, only done a quarter of the job. Had it done the job properly, the results could well be more than self financing, not to mention all the social benefits.

    As for the issue of verification of earnings in support of mortgage applications, my view is that the government should stay out of it. If, after 100+ years of lending people money to buy a home, banks and building societies haven’t managed to work out how best to verify declared earnings, then they shouldn’t be in the lending business.

  2. Very disturbing – we already live in a police state and now there are brokers (so say) who agree with lenders and HMRC being able to share information on Joe Public’s income.

    George Orwell would not have been surprised by the insidious developments of the past 10 years and the gradual removal of our freedoms and erosion of our privacy.

    Truly frightening !

  3. Ian Windsor-Smith 23rd July 2010 at 3:44 pm

    At this moment in time there is NO competition between lenders as there are insufficient numbers due to the take overs and those who have closed the doors. This will further assist lending institutions as to reasons why not to lend.

  4. If my memory serves me correctly HMRC recently admitted that the systems that they base their information on can’t be relied on for the “required accuracy”

    I agree with JS on this – no more tinkering. We need a comprehensive “joined up approach by Government to what is rapidly becoming a damaging situation in Financial Services in this country.

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