Thursday, 03 March 2016 22:19

"Lawyers back the FCA in Self Cert battle" - well not quite

We received notification of an article that appeared on the website Money Marketing today, it said that "Lawyers back the FCA in the Self Cert War of words".  We wanted to clarify a few things that appeared in the article and the headline.

First of all, we are NOT in a war of words with the FCA or anyone else. We have the utmost respect for the FCA, we don't have an issue with them. We politely disagree on a few points in their previous statement but "war" is a complete overreaction in our opinion, we haven't even spoken to them on this issue.

In our view it is unfortunate that certain Politicians have put the FCA in a position of being a regulator, yet at the same time they have tied the FCA's hands behind their back when it comes to the job of regulation. Specifically regulation of those trading from the EEA to the UK. That's especially unfortunate for these politicians given the EU referendum and the Government's position of staying in the EEA - EU. If it sounds contradictory then that is because it is, but that isn't our doing and people should take it up with them not lay the blame at our door or that of the FCA.

Secondly, people need to understand that often others are not arguing - giving quotes on what we have said, they are commenting on what they think we said after reading things across a whole variety of media outlets. Some of whom have never spoken to us directly. This means that we have some seriously respected heavy weight legal figures giving their opinions on things we might never have actually said. That's our general view, we don't necessarily link it to those in this article as we don't know the questions or the context of their answers.

Onto this story directly. The website quotes a Gentleman called Henry Warwick who is a barrister at Henderson chambers. Let us start by saying we can't see anything we actually disagree with Mr Warwick about. He is absolutely correct in everything he says, his opinion is almost identical to that which we received from our Counsel in Prague, London - and even that of several other countries we may have based ourselves in.

Mr Warwick is quoted as saying;

"I can’t imagine how it would be the case that a purely self-certified mortgage application would meet the requirements for a thorough assessment.”

We've also commented on this several times in the past, we have been super consistent here in that there really has never been a totally SelfCert mortgage, nobody has ever been allowed to SelfCert their identity for example. 100% Self Cert has never existed and will never exist.

The article then quotes a gentleman called Edwin Coe from Property Consultants Robert McNally;

"the MCD will force lenders to actively prove a borrower’s creditworthiness.". 

Again we don't disagree with Mr Coe and it fits the advice we have had. 

Another quote - Pinsent Masons partner Hannah Brader adds: 

 “[Under the MCD] you have to carry out a thorough assessment of the consumers’ creditworthiness and his ability to meet his obligations under the agreement."

Again this fits with everything we have been told from our own advisers. Across all 3 quotes we do not see any differences and agree fully with them all.

So how do we still say we can offer SelfCert products, even though we agree with the advice in the article?

Simple, the term "Self Cert" reflects someone's ability to Self Certify their income - NOT - their creditworthiness. Somehow the article has gone off on a separate line and started to get legal opinion on something that is not our line of reasoning. We have never argued that we would not verify someone's "creditworthiness". We have never even hinted at it. We have been in lending for many years and would never let someone Self Certify their creditworthiness. The article is a "strawman" article in it's points after this has been pointed out.

Regarding affordability and creditworthiness, should we not take into account that the ability of an applicant to raise at least a 15-20% deposit on a property as a substantial indication of creditworthiness and affordability? Why would it be sensible to ignore this? On its own we would argue that would meet the MCD's requirements, but in our case we go further to assess creditworthiness anyway.

We have no idea how the story got the headline it did because we agree with everyone in it and it does not contradict anything we have ever claimed.  

Let's keep things really narrow, under the MCD can someone Self Certify (very specifically here) their INCOME? Yes or No? 

If NO, please show us where it says that!

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Self Cert is not based in the UK. We are NOT regulated by the Financial Conduct Authority

Prague 1, Czech Rep