Mortgages  

Self-cert lender flagged by FCA hits back at critics

Self-cert lender flagged by FCA hits back at critics

Tighter regulations around mortgages due to be introduced this month will not impact business for a Czech Republic-based company controversially offering self-certified mortgages in the UK, the firm has said.

Selfcert.co.uk stated it offered people the ability to self-certify their income – but not their creditworthiness – and insisted this would be verified.

From 21 March, all firms which are part of the European Economic Area offering mortgages in the UK and have permission to operate within Britain, including those such as Selfcert.co.uk, must meet the the European Electronic Commerce Directive’s requirements of a thorough affordability assessment based on information that has been verified by the lender.

Article continues after advert

The company was subject to an FCA warning in January because of concerns that anyone using the service would lose UK consumer protection benefits such as the right to refer complaints to the Financial Ombudsman Service.

In a statement, Selfcert.co.uk said: “The term ‘self-cert’ reflects someone’s ability to self-certify their income – not their creditworthiness.

“We have never argued that we would not verify someone’s ‘creditworthiness’. We have never even hinted at it. We have been in lending for many years and would never let someone self-certify their creditworthiness.”

A spokesman for Selfcert.co.uk stated the lender also used the size of the applicant’s deposit as an indicator to judge the suitability of its mortgages.

Selfcert.co.uk launched on 18 January, but has since stopped taking applications for “at least three months” to work through a “severe backlog” of people that have registered an interest in their products.

The company offers one single rate for all its customers – 2 per cent above the Bank of England base rate – and will lend up to £500,000 with a maximum loan-to-value (LTV) of 15 per cent.

Adviser view

Ray Boulger, senior technical manager at John Charcol, said: “It is understandable why they have had a significant amount of interest on the basis that there is clearly a significant minority of people who don’t qualify for a mortgage under the current rules.

“The biggest disadvantage to a UK borrower will be that in the event of things going wrong they won’t have recourse to the Financial Ombudsman Service.

“This highlights a problem in the market, and the challenge for the regulator is to address that and see if there is some sort of halfway house allowing lenders more flexibility.”