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CAB wants care with lending
A report released by the Citizens Advice Bureaux called for more care when arranging loans and mortgages. The report claimed that providers of sub-prime loans and mortgages could have transacted business that they knew would be likley to result in defaults. The report also claimed that lenders were too quick to resort to legal proceedings when borrowers got into trouble with repayments.
But the report has been criticised by the Council of Mortgage Lenders who say it is sensationalist, skewed, disproportionate and simplistic.
The CML says customers recieve a high level of help and are treated carefully if they start to fall behind with loan repayments. It also says that it's specialist lenders have specific practices and procedures for dealing with payment defaults and accelerated court action is not typical.
Citizens Advice said they had looked at the cases of 1200 people who had approached them for help and said they found many had been given dubious advice and sold unsuitable loans or mortgages. The issue of affordability is key and with the rising house prices of recent years, many people felt safe relying on increasing equity levels.
Another body the IMLA which represents lenders said that it agreed with the moves towards more responsible lending. They cited the lower level of regulation for secured loans above £25,000. The FSA has slowly been focussing more attention on the processes involved in providing loans and mortgages, with the idea of providing more protection for consumers.
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