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Sub-prime suspect

The grey area between sub-prime and prime lending candidates could result in advisers giving inappropriate advice, say a panel of mortgage industry experts.

Contributors to a Money Marketing round table on the mortgage industry expressed concerns that sub-prime could result in the next misselling scandal.

Bradford & Bingley head of product operations David Bitner warned that many borrowers who respond to a sub-prime offer are capable of going straight to a high-street lender and advisers are not always steering them in the right direction.

Purely Mortgages managing director Mark Chilton said some mortgage intermediaries are driven by the promise of higher fees from sub-prime lenders. Chilton expects this area to be one of the main targets for the FSA this year.

Mortgage 2000 managing director Sean Hornsby also believes lenders need to take responsibility for making it clear which customers lie in which areas – prime or sub-prime – and argues that this needs to be put in writing.

Advantage Home Loans managing director Keith Dearling said: “The sub-prime market is so incredibly diverse. How are you going to stop the demand when 60 per cent of business debt consolidation mortgages come from the broker community?

Hornsby suggested: “We always talk about sub-prime fees being too high. Why don’t prime mortgage fees rise to meet them? No one has thought of that.”

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