Watchdog warns self-cert lender applicants ‘we can’t protect you’
Prague-based lender, Selfcert.co.uk, which launched just over a week ago but claimed it was forced to close its doors for three months after 4,700 emails.
The watchdog also stressed that self-certification loans, due to the ‘harm caused to consumers in the past,’ have been banned as since the Mortgage Market Review in April 2014, every consumer must be affordability checked.
From 21 March 2016, all firms offering mortgages in the UK (including EEA firms) will also have to comply with the Mortgage Credit Directive, which requires a thorough affordability assessment based on information that has been verified by the lender.
However, the European Electronic Commerce directive (ECD) allows Selfcert.co.uk to operate inside the UK, but consumers lose a raft of regulatory protections including the right to complain or be treated fairly when facing payment difficulties.
It also stressed that under the ECD, firms can only contact customers online, not by telephone or post, limiting communication options.
Firms providing online services from an establishment in an EEA State other than the UK under the ECD have to comply with the law of that state, rather than with UK regulatory law, which in this case is the Czech Republic.
If an adviser does recommend the self-cert lender and a consumer takes out a loan, consumers may not claim for compensation from that adviser either, said the FCA.
However, the regulator recommended consumers take advice from a regulated, qualified UK mortgage adviser and if determined to use a firm outside the UK, find out how it is regulated.
“Ask for a copy of the mortgage terms and conditions. Ask for the contact details of the firm’s regulator,” it said, adding: “Remember you will not be protected by UK regulation if things go wrong, and you could lose your home if you cannot afford your mortgage payments.”