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‘Most brokers are still flouting self-cert rules’

FSA says 64 per cent of cases it reviewed failed to demonstrate why self-cert was recommended

The majority of brokers are still contravening self-certifica- tion rules, with some helping clients to inflate their salaries to qualify for a non-status mortgage.

Following an FSA mystery- shopping exercise, the regul-ator says it will take action against firms it finds are not fulfilling their regulatory obligations.

Self-cert still appears to be unable to shake off its tarnished image, with 64 per cent of the 249 cases from 39 small firms reviewed by the FSA failing to demonstrate why self-cert was most appropriate for the customer.

In 36 per cent of cases, no reason was given or the reason was unclear as to why a self-cert product was recomm- ended. Forty-seven per cent of brokers did not demon-strate adequate affordability assessments.

The FSA is most concerned that brokers are still not evidencing and keeping records of the advice given. It will be working with the firms rev-iewed and publishing a summary highlighting examples of good and bad practice in the industry.

But lenders appear to have their houses in order, with the 10 reviewed all showing evidence of strengthening their systems and controls, leading to increased detection rates for fraudulent cases.

FSA managing director Clive Briault says: “The findings on sales and advice from brokers show significant weaknesses, which are disappointing.”

The Mortgage Practitioner sole trader Danny Lovey says: “Self-cert by nature is not black and white. You have to take extreme care. I think the FSA could do us all a favour and embark on a consumer campaign to show that self-cert is not a product to help you get a mortgage if you have not got the money.”

The Mortgage Business director of sales Peter Charge says: “Some of the smaller lenders have to make sure they are doing the necessary checks at point of sale and give guidance to intermediaries on how they should be detailing income on application forms. This is particularly difficult for the intermediaries if the lender does not have a robust online system.”

The FSA’s website is buckling under the volume of IFAs filing their retail mediation activity returns at the last minute.

Despite the regulator upgra-ding the system last month, IFAs have complained to Money Marketing that the FSA’s online RMAR application system crashed last Thursday afternoon, the day before the Friday deadline.

The continuing failure of the system to cope with high volumes of traffic means that IFAs filing their returns at the last minute risk missing their deadline and being hit with a 250 fine.

The FSA rejects reports that the online system keeps crashing but admits that, despite boosting its capacity, it still struggles when too many advisers log on to the system at the same time. But the regulator says it has no official stance on waiving fines for firms that fail to meet the deadline bec-ause of system failure.

Aifa director general Chris Cummings, who is compiling a dossier on problems that its members are having with RMAR, says: “We are concerned about continuing reports from members that the system is going offline at peak times. Any firm having problems, let us know.”

The McCroddan Partnership managing director Michael McCroddan says: “This is making our lives very difficult. Next time, I am going to file my returns earlier.”

But FSA spokesman Robin Gordon Walker says: “Inevitably, there is a slowdown if a load of advisers upload at the same time. Otherwise, the system is working well after the earlier technical problems.”


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