The information solutions provider Equifax has warned lenders to expect tighter scrutiny in the future by the Financial Conduct Authority (FCA). This comes in light of the FCA fining a major mortgage lender £1.2 million for not treating customers correctly.
Although the ‘Common Sense’ rules are not to be enforced until 2014, the principles are generally practised by many lenders in today’s market. Equifax’s marketing and performance director Lawrence Hamilton warns this fine of £1.2 million is a sign of increased monitoring by the FCA, which is only going to get tighter, aided by these new rules.
While the fine was related to lending practices during the time period of 2004-2009, the fine in question was due to the lender’s inability to prove that the mortgages sold were affordable to the borrowers. Risky lending was one reason given for the economic downturn and these poor practices were associated with mortgage lending.
This means that in the borrower’s capacity to afford a mortgage, and verification of one’s income, has now become significant aspects lenders take into account when processing someone’s mortgage eligibility. However, tighter checks by both the lender and the FCA could have adverse effects on the housing market, as too strict requirements could limit people’s capacity to gain a mortgage, which could stunt future growth in the market.
