You could sense the frustration in the FCA’s recent warning note to mortgage customers considering the option of self-cert loans from lenders operating outside the UK.
Certainly from a lender perspective, to see the firm in question, www.selfcert.co.uk, so flagrantly flouting UK regulation has been a real blow not only to the notion of responsible lending, but the wider mortgage industry as a whole, and certainly the effectiveness of our current regulatory system.
Regardless of the fact that this firm appears to have shut its doors to new customers within a few days, we must face the facts that a template of sorts has been established, and other propositions (based on similar lines) are now likely to follow. Clearly this loophole needs closing. However, whether we have the regulatory means to be able to do so is another question altogether.
There have been many suggestions that the popularity of this option shows that the UK mortgage market is somehow flawed. I don’t buy this but I am aware that if such an option is provided, there will always be a number of customers who want to pursue it. Should the next lender off the rank set up www.125ltvmortgage.co.uk then I am quite certain it will garner interest.
The big question is around whether consumers are fully aware of what they are getting themselves into. Do they have any idea that there will be zero protection should, for example, they miss payments or get into arrears? In such circumstances, they would not even be able to speak to the lender because it is operating under the Electronic Commerce Directive and can only contact its customers online.
I’m sure as potential customers look further into this proposition they will see it’s not all it is cracked up to be, and clearly given the reach of intermediaries in our UK market, there is a key role to be played by the advisory profession in warning clients of the many risks they would be taking in pursuing such an option.
For all that, there will still be those who do want to go down this route, and it is at this point, we have to query a system which allows this to happen. At a time when the regulatory responsibilities of all mortgage market players have never been so great, to see such an operation going about its business, is incredibly galling for all concerned, including I’m sure the FCA itself. I would therefore hope that the next update we have on this, and these types of businesses, is focused on how they are being stopped from operating.
