Money News
City watchdog, the FSA (Financial Services Authority), has cracked down on rogue mortgage brokers advertising loans to borrowers who have impaired credit.
Known in the trade as the sub-prime market, the regulator has confirmed that over the last two months it has told more than 200 mortgage brokers operating in this sector to withdraw or amend what it deems to be misleading advertising.
In the firms visited, examples of misleading information included fee disclosure where the range of fees advertised was very different from what consumers ended up paying. And, in some cases, customers were also being sold mortgages with sub prime rates, even where there was no evidence they had impaired credit.
It also found that in a number of cases where poor promotional materials had been issued, there were usually wider problems at the mortgage brokers concerned. As a consequence a number of these firms have now been referred to the regulator's Enforcement Division for further investigation.
Over the last two years the FSA has taken enforcement action in 12 cases relating to financial promotions, resulting in over £1.5 million in fines. Over 930 cases across all sectors have been pursued directly with firms, where there were suggestions that promotions fell below the required standards. Although action was not necessary in every case, in around 60% firms quickly amended or withdrew the advertisements without the need for formal disciplinary action.
The work on promotional materials runs alongside another FSA project looking at whether customers are treated fairly throughout the sub-prime mortgage advice and sales process. These findings will be published in summer 2007.
29 November 2006 © Moneyextra.com
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