Sub-prime lender calls for clarity in IFA deals

Specialist lender the iGroup is calling on independents to offer more “transparent” deals for their clients when advising in the non-conforming sector.

The non-conforming lender says it is concerned about practices which could mean clients are not offered good deals in the long term and says IFAs must be clear about what they are offering.

It is particularly concerned about lenders offering short-term fixed-rate products to clients that attract early redemption charges and allow the employed to self-certify.

The company says the practice of self-certification by employees could encourage them to behave irresponsibly and checks need to be put in place to ensure IFAs and lenders are giving clients the right deal.

The ability of employees to self-certify their income could do more harm than good in the long run, according to iGroup. IFAs need to be aware that self-certification does not necessarily mean that a borrower can afford their mortgage repayments.

iGroup says IFAs source around a quarter of all its business.

It recently established an in-house team responsible for IFA distribution and reported a record-breaking month in July with sales figures of almost £90m.

Head of sales and marketing Jonathan Sadler says: “It is critical that introducers start to look more closely at the ability of the client to meet monthly repayments in the long term and not just in the initial discount period.

“It is inevitable that many borrowers who have been attracted to inappropriate discounted products will find themselves facing finan-cial difficulty if this practice continues.

“No doubt, we could increase our volumes significantly if we allowed borrowers to self-declare. However, this goes against the ethos of our products.”