HBOS, Britain's largest mortgage provider, insisted yesterday that its procedures for vetting loans where customers guarantee their own income were sound after undercover researchers were allegedly told it would be easy to falsify their earnings.
A BBC documentary tonight will show that brokers based in West London and in Didsbury, near Manchester, who sold so-called self-certification mortgages on behalf of HBOS and other lenders, allegedly encouraged customers to lie about their salaries in order to get a bigger loan. Bank of Scotland and The Mortgage Business, both within the HBOS stable, are mentioned in the programme.
The development comes after Birmingham Midshires, another business owned by HBOS, was at the centre of allegations that advisers operating through its branch network allegedly guided potential customers towards inflating their income so that they could take out larger loans.
Birmingham Midshires put out a statement on Monday saying it had suspended three advisers pending an investigation it had started on receipt of the allegations, from the BBC's Money Programme. It has also recalled all of its 25 advisers to head office for emergency training on how to sell self-certification mortgages.
These products are intended for the self-employed, who cannot prove their earnings through pay-slips and so have to sign legally binding documents declaring their earnings. HBOS said it would "look at its procedures" in the light of the BBC programme, but added it had not taken action at either Bank of Scotland or The Mortgage Business because in both cases self-certification mortgages are only sold through brokers.
Nine mortgage brokers in Ealing, who were approached by undercover researchers, advised them to lie about their income. One, Fraser Wright, a broker who works at Townsends, said: "I've done it for myself and for my personal friends. It's a walk in the park." Mr Wright claimed to have earnings of £100,000 a year on his own mortgage application.
Other brokers caught on camera advising the practice were recommended by Rolfe East, Kinleigh Folkard & Hayward, Bairstow Eves Countrywide, Haart, Barnard Marcus, JAC Strattons, Northfields, Roberston Smith and Kempson.