Self-cert mortgage warning issued by FCA

The FCA has warned consumers today that if they take out a mortgage offered from outside the UK under the ECD, they will lose important UK consumer protection benefits, such as the right to refer complaints to the UKâ€™s Financial Ombudsman Service. Under the ECD, firms can only contact customers on-line, not by telephone or post.

Self-cert mortgages were effectively banned with the introduction of MMR, however selfcert.co.uk has sidestepped regulation by selling products from the Czech Republic.

Selfcert.co.uk launched last week but ceased taking new applications after three days due to a 'severe backlog' of people that have registered an interest in the products.

The statement from tha FCA says: "Previously, when consumers took out a self-certified mortgage they self-certified that the income stated in their mortgage application was true. Because of the harm caused to consumers in the past, this is no longer permitted in the UK and firms must check a customer can afford a mortgage, including verifying their income in every case. From 21 March 2016, all firms offering mortgages in the UK (including EEA firms) will have to comply with the Mortgage Credit Directive, which requires a thorough affordability assessment based on information that has been verified by the lender.

Even if a regulated mortgage adviser in the UK recommends such a mortgage, you will not be able to get compensation from that adviser if it turns out you cannot afford the mortgage payments. This is because the adviser is not responsible for assessing affordability."

Self-cert mortgage warning issued by FCA

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