Later Life lending – regulatory update
The FCA published the results of its multi-firm work on later life mortgage advertising and advice, which can be summarised as “action is needed to ensure good outcomes for later life borrowers”. However, surprisingly, some commentators have dismissed the urgency of any resulting action suggesting there is “nothing to see here” and that the FCA hadn’t said anything new.
Managing risk in loan portfolios
As risk consultants, with people that have lived through numerous previous recessions, we recognise the cyclical nature of the economy and the need to be prepared for whatever is thrown at us. We have been warning about the cost-of-living crisis, increasing debt to income ratios, payments shock for borrowers leaving fixed rate loans, increasing arrears and repossessions and the return of lender losses for a while now. It’s not us being ‘doom and gloom’ merchants – it’s us being realists.
Car finance firms face legal threat
The phrase ‘that’s the tip of the iceberg’ is often overused, but not in the case of three motor finance firms facing a class action in respect of overcharging claims. First, the excessive interest claims are eye wateringly large and second, if Courts follow the PPI ‘Plevin’ precedent, many more firms will be targeted with similar claims.
Stress tests should apply to all lenders!
The Bank of England recently announced that the major UK banks would be resilient to a severe stress scenario. Re-assuring news, especially considering that their stress scenario was more severe than the downturn during the global financial crisis and significantly more severe than current economic forecasts. PRA regulated banks are of course used to considering […]
FCA clampdown – a firm warning!
The FCA recently published its 2022/2023 annual report. Within the 200+ pages, there are many ‘golden nuggets’ of advice for existing authorised firms and individuals as well as those aspiring to such privileged positions. The report contains data showing it is getting tougher where it sees or predicts consumer harm. It notes that it cancelled the authorisation of 627 firms that failed to meet its minimum standards or stopped them from being eligible for authorisation. That’s 12 firms a week and a 30% increase over 2021.
Mortgage Charter ’breathing space’ gives lenders a headache
No one working in our industry will have missed the much publicised ‘Mortgage Charter’ agreed by members of UK Finance with the Government. Many of the provisions are not new and most lenders already comply with most of the clauses, but there are significant differences now. First, many of the agreed provisions were not previously obligatory, and second, the provisions were not widely publicised and therefore borrowers were not ‘demanding’ forbearance options as their right.
ESG –the need for independent due diligence until regulation catches up!
Earlier this month our Group Chief Executive and Founder, Brian Pitt, led a panel debate discussing transparency and greenwashing in ESG at the Global ABS conference in Barcelona. The debate was enhanced by the quality of the panel, which benefitted from the insight of European regulators.
Spotlight on directors
We are only a couple of weeks into 2024 and the year is already throwing up governance, risk and compliance challenges for individual directors and senior managers.
Motor finance challenges
This is not the first time car finance arrangements have been the subject of one of our updates. Less than 6 months ago we said, “three motor finance firms are facing a class action in respect of overcharging…..the excessive interest claims are eye-wateringly large and if Courts follow the PPI ‘Plevin’ precedent, many more firms […]
Closed books and Consumer Duty
In a recent speech, the FCA warned firms to focus on providing fair value in closed mortgage books, defined as mortgages that were sold before 31 July 2023 and that have not been marketed or sold to new customers since. The FCA said, “We know many firms have applied their laser focus on open book […]
