The Financial Services Authority (FSA) is clamping down on brokers specialising in sub-prime mortgage products.
Britain's financial regulator has warned brokers that supply products for borrowers with impaired credit that they must raise their standards, particularly in terms of their advertising tactics.
In the past year, the FSA has forced more than 200 brokers to withdraw or amend marketing material, since many neglect to divulge their exorbitant fees, which unwittingly force the indebted further into the red.
Borrowers with adverse credit are vulnerable and high-risk customers, which dubious brokers target with misleading marketing and exploit with high interest rates and uncompetitive deals, the FSA has revealed.
The regulator plans to clean up the market with stringent controls, in a move widely welcomed by the industry.
"The sub-prime sector is awash with dubious companies peddling heavily over-priced mortgages, often with exorbitant fees and excessive early repayment charges, to those people who can least afford to pay them," complained Ray Boulger, technical manager at independent mortgage specialist John Charcol.
The mortgage expert added that the latest FSA report "highlights, more than ever, the need for consumers to seek reputable, independent advice before deciding on a mortgage".
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Comments (1)
Nice to read a good article on a very interesting subject. I have had a bad experience in the past from one of these lenders.
Regards
Matt
Posted by Matt Jenkins | Posted on April 25, 2007 12:40