Lenders 'failing borrowers'

Published on Tuesday 9 January 2007 12:46

SOME lenders in the mortgage market are guilty of "significant failings" when advising borrowers, the Financial Services Authority warned today.

The regulator found around two thirds of the mortgage lenders it sampled did not have satisfactory processes in place when giving advice to borrowers - putting customers at risk of getting poor or unsuitable advice.

However, it refused to name any of the culprits.

Problems identified by the FSA included fundamental issues such as whether borrowers could afford the mortgages being offered.

The findings came in the wake of figures from accountants Grant Thornton last week which estimated almost 30,000 people will be declared bankrupt or take out individual voluntary arrangements during the first three months of the year, setting a record.

Clive Briault, managing director of retail markets at the FSA, said: "We found significant failings in the advice-giving processes in a number of mortgage firms. Poor processes increase the risk of unsuitable advice."

A total of 252 firms of varying sizes were assessed.