The credibility and relevance of the controversial self-cert lender, which set up outside the UK earlier this month, was thrown into question by the Financial Conduct Authority (FCA) and specialist distributors during a panel debate hosted by Mortgage Solutions.
Speaking to Mortgage Solutions at The Specialist Lending Event Lynda Blackwell, mortgage sector manager at the FCA, said: “From 21 March the MCD comes into force which will impose standards across the EU which demand a thorough assessment of affordability and for that information to be verified by lenders. He won’t be able to continue on this basis.”
Self-certification mortgages were banned under the terms of the Mortgage Market Review which made it necessary to assess affordability and proof of income for all mortgage applications. To circumvent these rules, Selfcert.co.uk set up its office in the Czech Republic which founder Graeme Wingate is legally able to do under an e-commerce directive established by the EU. Blackwell said it was part of the EU’s vision to have cross-border interaction between firms and customers.
But she added that statements made by the lender on its website promising to contact customers by phone would mean the lender was breaching the terms of the restricted service proposition it was afforded under the e-commerce directive. “The lender can only have contact with customers online,” said Blackwell.
Panellist Rob Jupp, chief executive of Brightstar Financial, questioned the reliability of a lender whose website was offline on its day of launch which it said was due to high levels of ‘demand’ from its product. He also referred back to a Mortgage Solutions interview with founder Graeme Wingate where he refused to originally disclose which country he would be based out of because it wanted to avoid prying eyes. “To say self-cert is coming back is rubbish,” added Jupp.
Blackwell stressed the vulnerable position borrowers would be putting themselves in by taking out one of these self-cert mortgages. “We are concerned that customers will not have the protections that they have here, they will not have the protection of the Financial Ombudsman Service, these are likely to be people who have affordability issues and they will not have the benefit of fair treatment if they go into arrears.
Yesterday the FCA issued an alert about self-certification mortgages warning consumers they would not be protected by UK financial regulations.
