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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.

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