FSA tells Sub Prime Market to Stick to Rules
For the last year the FSA has been working with mortgage firms to improve the standard of advertising and other promotional material.
In October and November this year it visited all the worst offenders and found that the same companies who were at fault with advertising also had deeper problems with processes and procedures. It has asked 200 morgage brokers to amend or withdraw misleading advertising and a number of companies have been referred to the FSA Enforcement Section for further investigation. During its investigation it also found examples of customers being sold Sub Prime mortgages when there was no evidence of credit impairment. This is actually a subject I’ve written about once or twice before and I’ve warned people that some brokers only deal in Sub Prime and to keep the customer, don’t inform them there are Prime rate alternatives.
As part of the press release about the investigation, Vernon Everitt, FSA retail themes director, said:
“Financial advertising has a massive influence on the decisions people make. So it must be clear, fair and not misleading, leaving people with a balanced picture of the key pros and cons. This is particularly the case in advertisements by mortgage brokers in the sub-prime market, where people are making one of the most important financial decisions of their lives. We need to see standards here rising - and fast.”
Given that advertising is one of the areas the FSA and OFT have combined forces on it is probably only a matter of months before the OFT come knocking on providers of Secured Loans doors.
