Posts with tag: FCA

Buy-to-let landlords to face tighter lending rules?

Published On: August 12, 2016 at 10:09 am

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Categories: Landlord News

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Buy-to-let investors could soon face tighter borrowing criteria, following news that mortgage lenders may face more stringent regulations when calculating deals for those investing in the sector.

The Financial Conduct Authority (FCA) is growing concerned that standards in the sector could be falling and that this could compromise the integrity of the UK’s financial system.

Supervision

At present, buy-to-let lenders are not supervised by the Prudential Regulation Authority. Now, the city watchdog is making plans to tighten the scrutiny of buy-to-let mortgage lending. It has already written to companies over which it has regulatory responsibility to tell them it is thinking of intervening in the expanding private rental sector.

A letter sent to affected firms by Philip Salter, the FCA’s director of retail lending, reveals the watchdog’s review of buy-to-let lending would include, ‘considering to what extent poor BTL underwriting by firms solo-regulated by the FCA might compromise the advancement of our objectives – in particular our objective to protect and enhance the integrity of the UK financial system, as well as the potential for poor BTL lending to affect the fair treatment of customers with regulated products.’[1]

Buy-to-let landlords to face tighter lending rules?

Buy-to-let landlords to face tighter lending rules?

Earlier on in the year, the Prudential Regulation Authority published a consultation paper, which put forward plans for new affordability tests for borrowers. This included a maximum, ‘stressed,’ interest rate of at least 5.5%.

The Bank of England believes banks are more than likely to further their lending in the UK buy-to-let mortgage market. This is estimated to be currently worth about £200bn over the course of a year. Under the changes, this could rise by 20% per year over the next two years.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/8/buy-to-let-landlords-could-face-tighter-borrowing-rules

 

 

FCA say mortgage advisors can do more

Published On: July 9, 2015 at 2:08 pm

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Categories: Landlord News

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An encouraging pair of studies from the Financial Conduct Authority has indicated that the majority of Britain’s get sufficient advice when they go to take out a mortgage for a property.

The FCA found that most lenders have taken measures to give advice. However, they also suggested there is room for improvement and that advisors should focus on delivering consistent results for customers.

Progress

Data from the report shows that despite no evidence of customer dissatisfaction, some firms were not taking necessary measures to gain relevant and helpful information on customers’ specific needs, before making their recommendations.

59% of advice given to customers was found to be suitable, with the basis of 38% of total recommendations being unclear. The survey suggests that some customers give the most importance to the initial monthly payment, which comes to the detriment of other factors.

‘A mortgage is a significant undertaking for anyone,’ said Linda Woodall, acting director of supervision at the FCA. ‘It is vital that customers are able to get suitable advice and a positive experience when deciding on their options. Some firms were able to provide this, but not all.’[1]

‘Although we welcome the considerable work of those firms delivering advice for the first time, and particularly those that have proactively identified issues within their own processes, there is still scope for improvement. We’ll continue working with firms to ensure they deliver good outcomes for consumers,’ Woodall added.[1]

Limited

Research from the FCA also showed that a large proportion of lenders have made substantial efforts to give advice by investing in systems, staff and operational capability. It also found that some firms rely on structured processes, which sometimes results in repetitive conservations and limits the advisor’s chances of engaging and assessing each individual customer’s needs.

FCA say mortgage advisors can do more

FCA say mortgage advisors can do more

In contrast, the report found that some firms delivered advice with limited or no structure. As a result, this led to inconsistent advice and more of a chance of unsuitable information being passed on.

Paul Smee, director of the Council of Mortgage Lenders, said that, ‘in particular, we welcome the FCA’s conclusion that there is no evidence of systematic consumer detriment or of significant numbers of customers getting an unsuitable outcome.’[1]

Lenders have had a huge workload in implementing the new rules and, in many ways, the report’s conclusions chime with what firms are telling us about the challenges they face. This work is evolving, as some lenders seek to fine-tune their processes. Like us, individual firms will welcome the opportunity to work with the FCA towards consistently delivering good outcomes for consumers,’ he added.[1]

[1] http://www.propertywire.com/news/europe/uk-mortgage-advice-report-2015070910729.html