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Warning signs on borrowing

Who is to blame when someone borrows too much money – broker, lender or borrower? Money Marketing gets the feeling it is going to be the subject of great debate following comments from the ombudsman Tony Boorman.

Last week, he made the following rather ominous remarks: “We find cases where I find it difficult to imagine how the lender could have considered the customer capable of maintaining the required level of payments. Rather, it seems that the advice has been more about generating commission or fee income than a fair assessment of the interests of customer.

“In some cases, the impact of poor advice can be clear and significant and we can and do make significant awards where there is a clear link between poor advice given and losses incurred by the customer.”

If that isn’t a warning sign, MM does not know what is. However, we fear the ombudsman will be overzealous. Misselling is, of course, misselling. If a broker has gone for the easy money for him or herself and the not so easy mortgage for the client, then all we can say is tough.

We know part of the advice process is to make sure people don not overstretch themselves but we wonder if, when given the chance of compensation, what consumers will say they were told.

Borrowing large sums of money, particularly on high income multiples, is a risky business but it does not mean that everyone who took out such a mortgage is due compensation.


FSA issues warning over market abuse

The FSA this morning issued a warning it will be investigating trading in UK financial shares in recent days. This comes on the back of rumours that HBOS had applied for emergency funding from the Bank of England which saw its shares plunge by 20 per cent.It says there have been a series of unfounded […]

Watson Wyatt says 70% of IFAs prefer variable annuities

Seventy per cent of advisers rate variable annuities more favourably than conventional annuities for generating income in retirement according to Watson Wyatt. It also found 60 per cent of advisers compare variable annuities favourably with income drawdown but the majority consider them a niche product.A serious 97 per cent say the minimum monetary value of […]

Resolution AM adds to UK desk

Resolution Asset Management has announced the appointment of Martin Brown to its UK equity desk.Brown joins from Aberdeen Asset Management and also worked for Glasgow Investment Managers. He left the firm in January 2008.He will report to chief investment officer for UK equities Peter Reid.Reid says: “I’m delighted to have attracted someone with Martin’s skills […]

L&G acquires Suffolk Life

Legal & General is set to buy Suffolk Life in a bid to increase its presence in the Sipp market.L&G will pay £15.75 per share for the company valued at £62m.Legal & General chief executive Tim Breedon says L&G is focusing its attention on pensions and the “mass affluent” market.He says: “Suffolk Life is an […]


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