FSA highlights mortgage brokers' failures

The Financial Services Authority (FSA) has identified the main areas in the mortgage brokering sector that need improvement.

These include affordability and needs assessment, judging the plausibility of incomes for self-certification borrowers and the assessment of advisers'' competence, the watchdog said.

Its comments come after a review by the FSA found that "several mortgage brokers continue to operate well below standard".

As a result of its findings, seven firms have been referred to the FSA''s enforcement division, while various others are being considered for referral.

The enforcement division gets involved in investigations when firms breach FSA rules or the provisions of the Financial Services and Markets Act 2000, according to the regulator''s website.

Stephen Bland, FSA Retail Intermediary sector leader, said that while a number of good mortgage brokers are meeting the minimum standards, "they are being undermined by the negligence or wilful non-compliance of others".

He said an "unacceptable" number of firms are not willing to change and are damaging the mortgage industry as a result.

Practices uncovered by the FSA include a willingness among firms to accept self-cert business despite being uncertain of the plausibility of financial information supplied, while other companies were willing to offer mortgages that they knew were unaffordable.

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