DB mortgages fined by FSA

The FSA recently fined DB Mortgages £840,000, as well as ordering them to pay £1.5M in compensation for irresponsible lending. This is the first time a lender has been specifically charged for this breach.

DB MortgagesLenders who offered interest-only or self-cert mortgages in the run-up to the economic meltdown may be a little concerned after a recent Financial Services Authority ruling.

The FSA recently fined DB Mortgages £840,000, as well as ordering them to pay £1.5M in compensation for irresponsible lending. This is the first time a lender has been specifically charged for this breach.

The focus was on lending practices and may be biased towards interest-only and self-cert mortgage – a potential hotspot should interest rates rise during the current financial climate.

Many of the now discredited lending practices brought to the UK early on in the lending boom between 2003 and 2007 follow the same pattern as those followed by DB Mortgages. In fact some lenders have already come under the regulator’s spotlight for aggressive arrears management (with three lenders previously fined for their arrears management practices).

Does this ruling set a dangerous precedent for the wider market? We’d love to hear your thoughts.

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