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#theforum2014: FCA accused of over-zealous approach to buy-to-let ‘gaming’

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  • 10/04/2014
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#theforum2014: FCA accused of over-zealous approach to buy-to-let ‘gaming’
The Financial Conduct Authority has been accused of being over-zealous in its pursuit of consumers who take out buy-to-let mortgages to purchase a home.

Speaking at The Buy to Let Market Forum in Birmingham, Matthew Wyles senior adviser at Castle Trust, said the debate around buy-to-let ‘gaming’ had become “grotesque”.

He said: “If a customer decides to side step a regulated loan and waive all the rights of protection which come with a regulated mortgage then that should be their problem.

“But instead we have a regulator which is so determined to protect consumers that they protect consumers whether they want to be protected or not.”

The FCA has been vocal about its concern that buy-to-let mortgages could be miss-used by borrowers looking for an easier route to owning their own home.

Buy-to-let mortgages, because of their unregulated nature, do not have to be assessed using the same affordability model as a residential mortgage making it an attractive option for fraudsters.

The regulator expects lenders and brokers to be alert to the potential of buy-to-let fraud and have systems in place to deal with this.

Last month BM Solutions loosened its criteria to allow first-time buyers to apply for a buy-to-let mortgage on the condition that it was a joint application and one of the applicants already owned a UK property.

But one month on the lender said it thought the decision to lend to first-time buyers was no longer acceptable because they did not have the experience to be a landlord.

Panellists advised brokers at the forum to sense check transactions and pre-empt any questions they thought the lender may ask.

One broker in the audience said lenders and intermediaries were aware of the risks to the consumer if they fraudulently took out a mortgage but consumers were not aware of the dangers.

She called for the regulator to warn consumers about the risks they are opening themselves up to if they falsely obtained an unregulated mortgage.

But Wyles said the FCA’s persistence to clamp down on this activity was tantamount to “impinging on people’s personal liberties.”

 

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