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Labour moves to tackle self-employed access to mortgages and pensions

Labour shadow ministers have met with business leaders in a bid to tackle a crisis in self-employed access to mortgages and pensions.

The meeting took place in London and shadow work and pensions secretary Rachel Reeves said she wanted to “break down barriers” to financial services products.

The latest Office for National Statistics data show those classed as self-employed have risen 13 per cent since 2010 to 4.2 million people by January 2013.

But only 22 per cent contributed to a pension in 2012/13, down from 62 per cent in 1996/7. The participation rate was at 35 per cent in 2005/6.

The Pensions Policy Institute has warned auto-enrolment will not be enough to boost take-up among self-employed people, who are not captured by the reforms.

One in five say they have struggled to get a mortgage because they are self-employed, particularly after tough new income verification rules were introduced as part of the mortgage market review. Some lenders demand up to 12 months of accounts to get a mortgage, verified by an accountant.

Reeves says: “Labour wants to break down the barriers which millions of self-employed people face when they are try to apply for a mortgage or save for a pension. We’re holding this summit to ensure the next Labour government does everything it can to help self-employed people to succeed.”

Shadow business secretary Chuka Umunna says: “All too often self-employed people are being held back and ignored by government and we’ve seen entire programmes put in place by ministers which fail to take their needs into account.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. ABSOLUTELY HILARIOUS – MMR a sledgehammer to MISS a nut.

    This would be really REALLY funny if it was not so very very sad – as I have said exhaustively, regulatory interference in a market that was not and never had been broken.

    As a result creating a bigger problem than the perceived ‘problem’ it purported to ‘solve’ – yes here we are self employed mortgage prisoners.

    Fast track, semi status, self cert or interest only anyone ?

    Good god !!!

  2. Might have been better to have a more nuanced response than simply banning products. Fast track / self cert loans were originally designed for self-employed customers whose tax returns always lagged any changes in actual turnover by a year or more if the business was growing. (Accountants tend to do their larger corporate client accounts and audit work before they move to complete tax returns for small business clients). These products were at lower LTVs than a standard mortgage to create an equivalent loss distribution curve (to a standard mortgage portfolio). As newer, less sophisticated product providers appeared they extended these products to salaried employees (who should always be able to produce evidence of income such as pay slips) and higher LTVs, which was always going to result in higher loss rates and greater impact on consumers. Options available to regulators would have included 1) restricting products to self-employed, 2) restricting LTVs for self-cert products or 3) restricting availability to lenders able to meet internal ratings approaches and / or pass some other measure of quality control.

  3. Quite right Dick I couldn’t agree more.

    There is a common pattern politician’s get involved in a market they think they understand. They used to interfere directly but because they would have to take the blame when it went wrong the new system is to appoint a body to regulate it who don’t understand what they are trying to regulate. I would love to know if there has ever been a government appointed regulator that has been fit for purpose.

    They regulate away products providers and choice for the end user and increase costs for the end user.
    The regulator will mumble about wanting to increase choice and decrease costs for the end user but they end up achieving the opposite, which of course is an unintended consequence.

    I have thought for a while now that once the electorate complains to their mp’s that they can’t get a mortgage the fur will start to fly. This process is now starting. The FCA and the B of E will try and blame the lenders for the mortgage supply problems and will probably try to re regulate the market.

    The lessons and mistakes of the past never seem to be learned they just keep repeating. The biggest lesson I could see from the last crash was that retail and investment banks should be separate, that in my opinion was all that needed to be fixed. It did used to be the case that they were separate but the knowledge of what happens if they are not was forgotten.

    A competent regulator, the FSA was in charge at the time should have known that they should be separate. Thank goodness the FSA aren’t in charge anymore.

  4. one day they’ll actually ask a broker what the score is instead of expensive long winded reports . That way they can have an answer immediately and get to work on a solution rather than wait 18 months.

  5. There are no barriers to self employed people saving in a pension or any other product. The only barriers are the constant fiddling by politicians that have put people off them.

    What a load of twaddle.

    Labour is trying to pretend that it is the party for the self made man/woman.

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