FSA Take Action Against Sub Prime Mortgage Brokers
The FSA (Financial Services Authority) have announced that they plan to take action against 5 sub prime mortgages brokers operating in the UK. The sector has been under investigation by the FSA since April this year, after a number of complaints were received about inappropriate products being sold to clients who could not afford them.
Sub prime mortgage brokers operate in the unpredictable area of the market which takes in high risk borrowers, people who may have county court actions or have suffered recent financial troubles. The sub prime lenders offer packages at much higher interest rates than normal, in order to take account of the extra risks which they take on. This has led to claims that some sales people are selling products to clients who have no chance of being able to afford the payments - something which the FSA acted upon fairly quickly.
The situation has become a little more serious with news that a number of sub prime lenders in the US have either gone into liquidation, or are experiencing serious finical difficulties. The ideas is to tackle any potential problems in the UK as soon as possible, in order to reduce the impact on clients as and when the UK property market and economy begin to turn down.
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