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Andy Watson, head of the FSA's mortgages and credit union department, said: "Where we find examples of possible inflation of incomes, we will make further inquiries which may lead to referrals to enforcement."
 
Since October companies have been required to supply customers with an initial disclosure document, which details the services it provides, and a key facts illustration giving personalised information about costs and risks of products. The documents are part of the regulator's drive to improve customer understanding of mortgages.
 
The Association of Mortgage Intermediaries, the industry trade body that represents sub-prime brokers, called the alleged income exaggeration "extremely regrettable".
 
Companies that grant loans to people with poor credit histories have been warned they could face enforcement action after the Financial Services Authority discovered three small mortgage brokers published yesterday, the FSA said there were still "too many cases" where firms did not follow the required procedures.
 
"It is difficult to establish the level of consumer detriment or potential mis-selling as many of the failings related to poor record-keeping and brokers could provide more detail when challenged, but we will be looking for better evidence of compliance with our requirements," said Mr Watson.
 
A further review of small mortgage firms' activities in the self-certified market, where borrowers certify their own incomes, and will publish its findings this autumn. The FSA assumed oversight of mortgage regulation since October at the request of the government. The mortgage industry has about 2.75m
 

 

 

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