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Topics: FSA| Lloyds Banking Group
The multibillion-pound self-certification mortgage industry, in which customers are not required to provide proof of income, is set to be banned by the financial regulator.
Dubbed "liar's loans" by critics, self-cert loans were blamed for playing a large part in the housing bubble and ensuing financial crisis, according to The Times.
The Financial Services Authority (FSA) is effectively planning to kill off self-cert home loans by introducing a rule compelling lenders to insist that customers provide evidence of their income. See story...
Pensioners will see an increase in the state pension of just £2.40 from next April, half the rise introduced the same time last year reports The Telegraph.
The marginal increase, which will see pension payments increase from £95.25 a week to £97.65, prompted outrage from charities and politicians, who called for the pensions system to be urgently reformed.
Andrew Harrop, head of policy at Age Concern and Help the Aged, said: "Although the commitment to raise the basic state pension by at least 2.5 per cent will be a relief for older people, a £97.65-a-week pension is still not enough to ensure a decent standard of living to people who have worked hard all their lives. See story...
Britain is on the brink of emerging from the recession but could slip back into negative growth again next year when the benefits of the fiscal stimulus package begin to wane, a leading industry body has said reports The Times.
The forecast by the British Chambers of Commerce (BCC) was followed by separate data showing that the retail industry had rebounded in September. Growing consumer confidence pushed sales up by 2.8 per cent year on year, according to the British Retail Consortium (BRC) and KPMG, the accountancy firm.
The BCC said that the results from its third-quarter economics survey showed that the decline in activity was ending, with improvements in business confidence, employment, investment and domestic sales and orders, as well as export sales and orders in the services and manufacturing sectors. See story...
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Can't cope
The potential banning of self cert mortgages is an interesting reaction from the FSA. The facility obviously fulfilled a consumer need because it was used. But this action indicates that the FSA have little interest in protecting consumer choice. We have no idea what the actual level of abuse was because no-one is tracking (or publishing) bad cases against total cases. Is it 1% deviancy or 50% deviancy. Providers must have made money out of the facility, otherwise they would not offer it. So the FSA act as a Dictator (there is no court of appeal with the FSA) to say that because some people were naughty absolutely no-one will have the facility. The inference therefore is that, yet again, the FSA have demonstrated that they have no idea how to manage the regulation of a product. They appear to want everyone to live in a black/white world; reality is that there are mainly shades of grey, and this is beyond them. Whilst abuses were taken with non cert mortgages, indicating stricter regulation would be appropriate, so there have been abuses with most other products. Are we going to have lots of other products banned because the FSA can't cope. And can someone provide statistical evidence that non cert mortgages made a material difference. We appear to react more on instinct than hard evidence. So should we move back to supporting the Flat Earth Society?
Posted by: Glen McKeown
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At last!
Good Lord! At last! Stable doors and horses come to mind. I know I and others were pressing for this – in writing – years ago. Now lets see better LTVs and income multiples. Max 80% LTV and Max X3 income (main earner only). Contrary to popular belief it is NOT everyone’s right to buy their own home – only the right of those who can afford to. The alternative is evidenced by the financial mess in which we now find ourselves. The foregoing might actually bring down house prices and the young may perhaps once again be able to afford to get on to the ‘housing ladder’. (After prudently saving – of course.)
Posted by: Harry Katz