Sub-prime advisers Blast IFA Mortgage Mis-selling Claims

Cartel Client Review in the press

Leading sub-prime advisers have blasted a top IFA for claiming the non-conforming sector was at risk of mis-selling mortgages.

 

The claim was made in last week’s Financial Adviser by Carl Wright, the managing director of Manchester-based IFA Cartel.

 

He claimed that intermediaries were deliberately putting clients on heavy adverse products to secure higher procurement fees and that lenders were turning a blind eye to the practice. The comments have sparked a backlash from those in the sub-prime market.

 

Thomas Reeh, chief executive of mortgage broker blackandwhite.co.uk, said Mr Wright’s comments were unwarranted and damaging to the industry. He said: "It is just laughable that broker and lender would conspire together to put a vulnerable customer on a higher sub-prime lending plan. Everyone in the mortgage industry is aware you need to justify and evidence all recommendations that are given, and if a customer is heavily adverse that is usually easy to establish and document. It is a lender requirement."

 

He also refutes Mr Wright’s assertion that the sub-prime sector is heading for a crash, or that regulators will uncover a hornet’s nest when looking into the market. Mr Reeh said: "To claim that half of all non-conforming lending is mis-sold really makes a mockery of all the tens of millions that have been spent by the mortgage industry in getting their systems and processes up to FSA standards."

 

Wayne Unsworth, mortgage adviser for York-based Hallmark-ifa, said: "I do not accept the claim at all. To say 50 per cent of sub-primes are being mis-sold is completely ridiculous." But Mr Wright has stood firmly by his comments.

He said: "My information has come direct from the horse’s mouth, it is not simply my opinion."

 

"The people commenting on what I said do not need to be judge and jury, the FSA will be judge and jury. It does not matter if it is 50 per cent, 60 per cent or 40 per cent. If there has been a significant number of cases where a client has been mis-sold sub primes for commission, it is absolutely outrageous."

 

Publication date: 3 November 2005

Publication name: Financial Adviser

 

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