FSA investigating mortgage 'misselling'
Updated on 20 May 2008
Financial watchdog cofirms to Channel 4 News that misselling investigation is underway and acknowledges concern over 'growing' problem.
The Financial Services Authority (FSA) has confirmed to Channel 4 News at Noon that it is currently investigating cases of the misselling of mortgages.
Although it wouldn't say how many or whom it was investigating, the principal Financial Ombudsman Tony Boorman told the programme that:
"Certainly we see cases of misselling where we frankly find it extremely difficult to believe that a responsible lender, a responsible intermediary, could have in all conscience advised the customer that this was a sensible product, a sensible size of loan for them to take out given what that lender, given what that broker knew about the customer's circumstances..."
Also talking to Channel 4 News at Noon, Peter Tutton, Social Policy Officer of Citizens Advice said:
"We've seen people on benefits, maybe unable to work, given mortgages that they could never really service.
"People who have serious debt problems that they're trying to deal with being contacted by people saying 'Do you want to buy your council house?' for instance, and getting into difficulty very quickly. Also people who might be over retirement age given mortgages that will stretch to very old age with no account [taken] of their income.
In one case mortgage costs made people's expenditure £200 a month more than their income and there was no way that mortgage was going to stand up over time."
Despite current complaints over misselling only amounting to less than 5 per cent of total complaints about all mortgages - as estimated by the ombudsman - the number of complaints overall about mortgages (all types of complaints) has gone up around 50 per cent from 4,300 in 2006/7 to 6,500 in 2007/8 and those relating to misselling are expected to rise.
