Professional negligence claims to rise against lenders?

Published on 22 Jul 2010 under category: legal

Mortgage lenders could be subject to more professional negligence claims.

The Financial Services Authority (FSA) has launched a consultation paper on responsible lending, which aims to shift the burden of responsibility for defaults from borrowers to lenders.

Firms could become obliged to assess the mortgage applicants' general outgoings, as well as verify their income.

In addition, the proposals are expected to reduce the number of case of mortgage fraud.

Research by the FSA last year found that close to half of all successful mortgage applicants did not have their income details verified by the lender between 2007 and 2009.

This could mean that more firms are accused of professional negligence if their customers find themselves in serious financial arrears.

Industry bodies have criticised the moves to overhaul existing regulation, arguing that it is likely to penalise borrowers who are already having difficulties accessing finance for home ownership.

However, lenders could benefit from the legislation as the FSA continues with its mission to crack down on irresponsible lending.

If you require advice on Professional Negligence please call us on +44 (0)20 7831 0101 and ask for Peter Mellett.