Professional negligence measures 'have uncertain consequences'

Published on 22 Jul 2010 under category: legal

Measures to address professional negligence in mortgage lending could be a "step into the abyss", according to one housing market body.

The Intermediary Mortgage Lenders Association (IMLA) has criticised recent proposals on responsible lending from the Financial Services Authority (FSA).

Brokers and other intermediaries could be forced to guarantee that mortgage applicants are able to pay back capital payments, as well as assess the rest of their expenditure to prevent defaults.

Commenting on the paper, IMLA's executive chairman Peter Williams said: "By its own admission the FSA agrees its proposals will impact upon the accessibility and cost of mortgages, though it cannot be specific.

"The FSA has asked for comments over the next few months and I expect considerable pushback from the industry."

Mr Williams also warned that such moves could have a considerable impact on the industry, with the mortgage market becoming "unrecognisable" if the measures are implemented.

Lenders could find that they face more professional negligence claims if they fail to accurately assess the ability of lenders to pay back mortgages.

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