Mortgage lenders slammed for ‘poor processes’

Each firm has been fined £10,500 as the FSA takes steps to clamp down on mortgage lenders handing out loans that leave consumers with an unsustainable debt management situation.

As part of a review of more than 250 companies around the UK, the FSA concluded that there was “scope for improvement” in a variety of areas relating to the way British consumers are advised on mortgage borrowing.

Jonathan Phelan, head of retail enforcement for the FSA, commented: “Poor processes of the kind we identified in these mortgage brokers meant there was a risk of unsuitable mortgage contracts being recommended.

Explaining why these problems arise, he said “either the advisers were not appropriately qualified and supervised” or “the assessments of the customers’ needs and circumstances were incomplete or poorly documented”.

Figures released by Abbey earlier this week showed that the average amount borrowed by first-time buyers in the UK has almost doubled over the course of the last four years.