According to The Guardian there is evidence of an abundance of, what Americans call, Ninja mortgages (No Income, No Job or Assets) having been sold in the UK.
These mortgages and debts are, when looked at in the cold light of day, unaffordable by many of the people who are sold them. However, that doesn't seem to have stopped brokers and banks foisting them on the unwary.
The reason for this wanton disregard for financial probity is simple, commission. Brokers are paid a nice fat commission for selling these products, and therefore have a vested interest in selling as many as possible.
Which? claim that the rot set in during the 1980's with endowment mortgages.
Since then, the financial services industry in Britain has been happily destroying its reputation and most probably the economy.
Showing posts with label brokers. Show all posts
Showing posts with label brokers. Show all posts
Tuesday, October 02, 2007
Wednesday, July 04, 2007
FSA To Warn on Sub Prime Market
The Financial Services Authority (FSA) will this week issue a warning about the UK's subprime mortgage market, which lends to people with poor credit records.
The FSA will criticise both lenders and brokers, when it publishes the results of its investigation into the mortgage market.
The FSA has reportedly found poor record-keeping at some brokers, showing that they are unable to demonstrate that they sold customers mortgages that were suitable for them (echoes of the endowment mortgage scandal, don't these people ever learn?).
The FSA's report comes amid the continuing collapse in the US subprime market, partly due to a sharp rise in borrowing costs in the past three years.
Another nail in the coffin of the tarnished reputation of the UK's financial services industry.
The FSA will criticise both lenders and brokers, when it publishes the results of its investigation into the mortgage market.
The FSA has reportedly found poor record-keeping at some brokers, showing that they are unable to demonstrate that they sold customers mortgages that were suitable for them (echoes of the endowment mortgage scandal, don't these people ever learn?).
The FSA's report comes amid the continuing collapse in the US subprime market, partly due to a sharp rise in borrowing costs in the past three years.
Another nail in the coffin of the tarnished reputation of the UK's financial services industry.
Tuesday, May 22, 2007
A Portent of Doom?
The news that Jon Hunt, the owner of estate agency Foxtons, will sell Foxtons for around £370m to BC Partners a private equity group has caused a few worries in the housing market.
This signals to many that Hunt has, in effect, "called the market" and decided that now is a good time to get out of UK property.
Foxtons started trading in a converted Italian restaurant in Notting Hill 26 years ago, it now has 19 branches in London. Hunt will continue to work in the US market.
Last year, a BBC undercover documentary made a number of allegations about the firm. It claimed staff used faked documents to support inflated prices, put forward false offers to sellers, and made use of customer information passed on to them by Foxtons-owned mortgage broker Alexander Hall, which is also being bought by BC Partners.
Foxtons joined the industry's ombudsman scheme, an independent dispute resolution service which can award compensation, this year.
The sale of Foxtons UK business is subject to regulatory approval, which is expected within six weeks.
This signals to many that Hunt has, in effect, "called the market" and decided that now is a good time to get out of UK property.
Foxtons started trading in a converted Italian restaurant in Notting Hill 26 years ago, it now has 19 branches in London. Hunt will continue to work in the US market.
Last year, a BBC undercover documentary made a number of allegations about the firm. It claimed staff used faked documents to support inflated prices, put forward false offers to sellers, and made use of customer information passed on to them by Foxtons-owned mortgage broker Alexander Hall, which is also being bought by BC Partners.
Foxtons joined the industry's ombudsman scheme, an independent dispute resolution service which can award compensation, this year.
The sale of Foxtons UK business is subject to regulatory approval, which is expected within six weeks.
Wednesday, January 24, 2007
Financial Brokers Exposed
The Publican warns of two financial brokers who are scamming licensees:
"Gateway Finance.co.uk and Funds4Business, the brokers exposed by The Publican after ripping off licensees, are making it onto TV.
BBC South’s investigative programme Inside Out has been looking into their director Gary Thomas, and has interviewed victims of the financial broker.
The Publican unveiled the company in February 2005 following investigations, which revealed that licensees were left out of pocket after loans promised by the company failed to materialise. The company was also the subject of an investigation by The Mirror, following The Publican’s investigations.
Licensees claimed they had been promised a loan or mortgage, paid an administration fee of £350 and had not received the deal they have been promised.
Some have even paid arrangement fees of nearly £2,000 while others have paid for a valuations costing up to £1,600 and have still not been provided with the deal they were promised.
The programme will be shown on BBC 1 South Friday, January 26 at 7.30pm".
"Gateway Finance.co.uk and Funds4Business, the brokers exposed by The Publican after ripping off licensees, are making it onto TV.
BBC South’s investigative programme Inside Out has been looking into their director Gary Thomas, and has interviewed victims of the financial broker.
The Publican unveiled the company in February 2005 following investigations, which revealed that licensees were left out of pocket after loans promised by the company failed to materialise. The company was also the subject of an investigation by The Mirror, following The Publican’s investigations.
Licensees claimed they had been promised a loan or mortgage, paid an administration fee of £350 and had not received the deal they have been promised.
Some have even paid arrangement fees of nearly £2,000 while others have paid for a valuations costing up to £1,600 and have still not been provided with the deal they were promised.
The programme will be shown on BBC 1 South Friday, January 26 at 7.30pm".
Thursday, January 11, 2007
Caveat Emptor
As if Britain's financial services industry did not have a bad enough reputation already, another nail has just been driven into it by the Financial Services Authority (FSA).
It seems that, according to the FSA, over 66% of mortgage advisors are failing to provide suitable advice in relation to mortgages, and some do not carry out the appropriate background checks required on prospective customers.
The FSA conducted a survey of 252 mortgage advice companies using; mystery shoppers, FSA visits and questionnaires.
Less than 33% of those surveyed had processes which ensured advice given was suitable.
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 being given.
It is essential that firms have robust processes in place, so that they treat their customers fairly and provide suitable advice. It is crucial that customer needs are assessed properly. Customers should consider what they can afford both now and in the future, taking into account any likely changes to their circumstances."
Some companies have been "referred to enforcement", and face the risk of hefty fines.
These findings further damage the poor reputation of some mortgage advice firms. Less than 3 months ago one mortgage broker firm was fined £17K by the FSA for cold calling and mis-selling payment protection insurance.
Some mortgage brokers were also found to be misleading borrowers who had a poor credit history.
The old adage "caveat emptor", buyer beware, is as applicable today as it's always been.
You have been warned!
It seems that, according to the FSA, over 66% of mortgage advisors are failing to provide suitable advice in relation to mortgages, and some do not carry out the appropriate background checks required on prospective customers.
The FSA conducted a survey of 252 mortgage advice companies using; mystery shoppers, FSA visits and questionnaires.
Less than 33% of those surveyed had processes which ensured advice given was suitable.
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 being given.
It is essential that firms have robust processes in place, so that they treat their customers fairly and provide suitable advice. It is crucial that customer needs are assessed properly. Customers should consider what they can afford both now and in the future, taking into account any likely changes to their circumstances."
Some companies have been "referred to enforcement", and face the risk of hefty fines.
These findings further damage the poor reputation of some mortgage advice firms. Less than 3 months ago one mortgage broker firm was fined £17K by the FSA for cold calling and mis-selling payment protection insurance.
Some mortgage brokers were also found to be misleading borrowers who had a poor credit history.
The old adage "caveat emptor", buyer beware, is as applicable today as it's always been.
You have been warned!
Tuesday, November 28, 2006
Nationwide Reneges on Mortgage Deal
Nationwide has announced that it is to scrap its highly publicised guarantee that new and existing customers will receive the mortgage same deals.
As from December 1st, existing Nationwide customers who want to change deals, borrow more or remortgage will be penalised by higher rates.
Mortgage brokers claim that Nationwide had reneged on its principles.
In the recent Nationwide advertising campaign (Nationwide's slogan is "proud to be different"), the society promotes its promise to offer all customers the same rates.
The advertisements also criticise other lenders that offer better deals to new clients, but fail to reward the loyalty of existing customers.
Melanie Bien, of Savills Private Finance, the mortgage broker, said:
"This is a real shame. Nationwide made a principled stand, promising existing and new customers that no one would receive preferential rates. This guarantee no longer stands."
The new policy favours first time buyers and people moving house.
On a two-year tracker deal, remortgagers on a rate of 4.99% will pay £21 a month more than homebuyers, who will receive a rate of 4.73%.
Ms Bien added:
"Translated, Nationwide's change of policy means it can now offer more competitive rates for first-time buyers by charging others a higher rate."
Northern Rock and Alliance & Leicester still offer the same rates to all customers.
Stuart Bernau, an executive director of Nationwide, said:
"By making these changes, we will achieve greater flexibility and will be better placed to offer all our mortgage customers what they want."
Ray Boulger, technical director at John Charcol, said:
"This U-turn hurts the building society movement because Nationwide has been the most vocal in making claims about the benefits of mutuality. These claims now look rather hollow.
A large part of Nationwide's advertising was based around how good it was that they were a mutual. Now it seems that they are doing the same as what they criticise others for doing. It is hypocritical."
Adding:
"Nationwide claimed to pride itself on not discriminating against loyal customers. There can't be much pride left after today."
Money is the prime motivator here, customer care comes second.
As from December 1st, existing Nationwide customers who want to change deals, borrow more or remortgage will be penalised by higher rates.
Mortgage brokers claim that Nationwide had reneged on its principles.
In the recent Nationwide advertising campaign (Nationwide's slogan is "proud to be different"), the society promotes its promise to offer all customers the same rates.
The advertisements also criticise other lenders that offer better deals to new clients, but fail to reward the loyalty of existing customers.
Melanie Bien, of Savills Private Finance, the mortgage broker, said:
"This is a real shame. Nationwide made a principled stand, promising existing and new customers that no one would receive preferential rates. This guarantee no longer stands."
The new policy favours first time buyers and people moving house.
On a two-year tracker deal, remortgagers on a rate of 4.99% will pay £21 a month more than homebuyers, who will receive a rate of 4.73%.
Ms Bien added:
"Translated, Nationwide's change of policy means it can now offer more competitive rates for first-time buyers by charging others a higher rate."
Northern Rock and Alliance & Leicester still offer the same rates to all customers.
Stuart Bernau, an executive director of Nationwide, said:
"By making these changes, we will achieve greater flexibility and will be better placed to offer all our mortgage customers what they want."
Ray Boulger, technical director at John Charcol, said:
"This U-turn hurts the building society movement because Nationwide has been the most vocal in making claims about the benefits of mutuality. These claims now look rather hollow.
A large part of Nationwide's advertising was based around how good it was that they were a mutual. Now it seems that they are doing the same as what they criticise others for doing. It is hypocritical."
Adding:
"Nationwide claimed to pride itself on not discriminating against loyal customers. There can't be much pride left after today."
Money is the prime motivator here, customer care comes second.
Friday, October 27, 2006
Lousy Call Centre Security Puts You At Risk
Poor security at Indian call centers resulted in the theft and illegal trading of personal financial information, according to charges raised in a report by the London-based Channel 4, which broadcast the results of a 12-month investigation on October 5th.
Channel 4's Dispatches program reported that it has discovered data protection breaches at several Indian call centers. Dispatches claims that confidential information on UK mobile phone customers, as well as their credit or debit card details, have been gathered and sold to third parties.
The Information Commissioner's Office, a UK government data privacy watchdog, says it is investigating the claims made by Channel 4.
"It appears that some mobile phone companies' call centers in India are being targeted by criminals intent on unlawfully obtaining UK citizens' financial records and this will be the focus of our investigation," the Information Commissioner’s Office says in a statement.
Dispatches reporters discovered a phenomenon known as "data farming" in which unauthorized harvesting of personal information is sold on at a profit. The program alleged that some Indian call centre workers are involved in the scam, gathering data from customers before selling it on to brokers.
"What has been happening is that UK customers phone a mobile phone company's call centre, which is located in India, and they are asked for their bank or credit card details as part of a credit check," a Channel 4 spokeswoman said. "For example, they will be asked for their card number, expiry date and verification code, the three-digit code that is displayed on the back of their card. This information is then stored on the call centre's computer system and it is then illegally accessed."
In the program, an undercover reporter is shown obtaining personal financial data from an Indian middleman. The data includes full banking and financial profiles. The data was not taken from bank call centers, but from call centers working for UK mobile phone operators.
Indian IT trade association Nasscom criticised Channel 4 after the London-based TV station refused to show the organization any of the footage before the broadcast. Nasscom called on Channel 4 to co-operate in rooting out and prosecuting any "corrupt" call centre workers.
Source Citadel Advantage
Channel 4's Dispatches program reported that it has discovered data protection breaches at several Indian call centers. Dispatches claims that confidential information on UK mobile phone customers, as well as their credit or debit card details, have been gathered and sold to third parties.
The Information Commissioner's Office, a UK government data privacy watchdog, says it is investigating the claims made by Channel 4.
"It appears that some mobile phone companies' call centers in India are being targeted by criminals intent on unlawfully obtaining UK citizens' financial records and this will be the focus of our investigation," the Information Commissioner’s Office says in a statement.
Dispatches reporters discovered a phenomenon known as "data farming" in which unauthorized harvesting of personal information is sold on at a profit. The program alleged that some Indian call centre workers are involved in the scam, gathering data from customers before selling it on to brokers.
"What has been happening is that UK customers phone a mobile phone company's call centre, which is located in India, and they are asked for their bank or credit card details as part of a credit check," a Channel 4 spokeswoman said. "For example, they will be asked for their card number, expiry date and verification code, the three-digit code that is displayed on the back of their card. This information is then stored on the call centre's computer system and it is then illegally accessed."
In the program, an undercover reporter is shown obtaining personal financial data from an Indian middleman. The data includes full banking and financial profiles. The data was not taken from bank call centers, but from call centers working for UK mobile phone operators.
Indian IT trade association Nasscom criticised Channel 4 after the London-based TV station refused to show the organization any of the footage before the broadcast. Nasscom called on Channel 4 to co-operate in rooting out and prosecuting any "corrupt" call centre workers.
Source Citadel Advantage
FSA Fines Credit Broker
The Financial Services Authority (FSA) has fined LOANS.CO.UK, a licensed credit broker, £450K for mis-selling Payment Protection Insurance (PPI).
Approximately 14,400 customers were sold policies that they may not have needed.
Last week the Office of Fair Trading (OFT) referred the PPI industry to the Competition Commission. The conclusion of a five month investigation by the OFT was that the sale of PPI policies offered a "poor deal and often less protection than [consumers] think".
PPI is worth around £5BN a year, so it should come as little surprise to learn that some companies sell these rather dubious products in an "aggressive" manner.
In theory the insurance is meant to provide people with protection, if they fall ill or lose their jobs. The FSA was critical of the way that Loans.co.uk had been selling, usually over the telephone. It said that customers were not given enough information at the point of sale to make an informed choice.
One would have thought that the financial services industry had learned its lesson from the endowment mortgage scandal of the 80's and 90's. Unfortunately not, despite its reputation being in tatters, it seems that the financial services industry is determined to make money no matter what the cost to the poor saps that it dupes and its own reputation.
Approximately 14,400 customers were sold policies that they may not have needed.
Last week the Office of Fair Trading (OFT) referred the PPI industry to the Competition Commission. The conclusion of a five month investigation by the OFT was that the sale of PPI policies offered a "poor deal and often less protection than [consumers] think".
PPI is worth around £5BN a year, so it should come as little surprise to learn that some companies sell these rather dubious products in an "aggressive" manner.
In theory the insurance is meant to provide people with protection, if they fall ill or lose their jobs. The FSA was critical of the way that Loans.co.uk had been selling, usually over the telephone. It said that customers were not given enough information at the point of sale to make an informed choice.
One would have thought that the financial services industry had learned its lesson from the endowment mortgage scandal of the 80's and 90's. Unfortunately not, despite its reputation being in tatters, it seems that the financial services industry is determined to make money no matter what the cost to the poor saps that it dupes and its own reputation.
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