FCA warns against self-cert overseas mortgages
Wed 03 Feb 2016
The Financial Conduct Authority has warned against taking out a self-cert mortgage from a company based
Once upon a time, consumers in the UK were able to take out mortgages that let them self-certify the amount
stated as their income in their application. One housing crash later and self-certification is no longer permitted in
the UK, with the Mortgage Market Review having since introduced strict affordability regulations and checks.
The FCA's warning arrives just as a new lender in the Czech Republic has been advertising heavily for business.
Selfcert.co.uk, which launched on 18th January, announced just a few days later that it had stopped taking new
applications until further notice due a "severe backlog" of people who have registered an interest.
"People have been contacting us since reports of the products returning first appeared in Novermber 2015," says
the site, which offers up to 500,000 with a maximum loan to value of 85 per cent.
"Unlike lenders in the UK, we have the freedom to decide for ourselves who we do and don'tlend to. We are not
guided by the FCA," adds the company.
Indeed, the FCA has restated that fact, advising consumers not to apply for mortgages due to the lack of
protection it offers.
"If you take out a mortgage offered from outside the UK under the ECD, you will lose important UK consumer
protection benefits, such as the right to refer complaints to the UKs Financial Ombudsman Service and to be
treated fairly when facing payment difficulties," cautions the watchdog.
"Under the ECD, firms can only contact customers on-line, not by telephone or post. This means you will not be
able to speak to the firm about your mortgage arrangements."
Firms providing on-line services from an establishment in an EEA State other than the UK under the ECD have to
comply with the law of that state, rather than with UK regulatory law, which means that if anything does go wrong,
the responsibility is with the other country's authorities.
"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," adds the FCA.
"Whilst we disagree with the points in [the FCA statement]" comments the lender, "we certainly think people
should read it and decide for themselves. We are not anti FCA in anyway and people should listen to them with
an open mind."
UK lending rises as confidence returns
UK lending rose at the end of 2015, according to figures from the Bank of England, as confidence returned to the
The number of loan approvals for house purchase was 70,837 in December, up from the average of 69,462 over
the previous six months. The number of approvals for remortgaging was 41,708, also up from the average of
39,540 over the previous six months.
Peter Rollings, CEO of Marsh & Parsons, comments: "Mortgage lending in December reflected some of the
rejuvenated confidence radiating from buyers. After the Autumn Statement extensions to Help to Buy, and the
rock-bottom base rate lasting out the year, first-time buyers were feeling decisive, and this was mirrored by a
clear upswing in house purchase approvals from November to December. This energy has definitely been carried
over into 2016, and January has already seen an impressive influx of motivated buyers, eager to progress up the
Author - Dan Johnson