OFT assaults mortgage lenders' record
John Bridgeman, Director-general of Fair Trading, said lenders and brokers who ignore his new guidelines published yesterday will risk losing their credit licences.
``The guidelines highlight some of the main practices which I consider to be deceitful or oppressive, or otherwise unfair or improper - whether unlawful or not - and which, if continued, will lead me to take regulatory action against those involved," he said.
The director-general singled out dual pricing, where the monthly repayment on a mortgage rises if the customer misses a payment.
Mr Bridgeman also said the use of the `Rule of 78' for the early settlement of loans, which is used to "front load" charges on a mortgage, so that even if customers repay the loan early they have already paid enough interest to service the entire original term of the mortgage, was "inappropriate".
Mr Bridgeman's action follows criticism of City Mortgage Corporation (CMC), a non-status mortgage lender which has attracted a number of complaints due to its relatively high rates of interest on its dual-priced loans.
Politicians and the press zeroed in on CMC this month when William Hague's office declared that David Steene, CMC's chief executive, had made a private donation of pounds 20,000 to Mr Hague's campaign for the leadership of the Conservative Party.
David Steene, managing director of CMC, welcomed the OFT report yesterday: "I welcome wholeheartedly the fact that the OFT has issued these guidelines.... We expect to lead the industry in the adoption of best practice and clear communications for the benefit of our customers and, over recent months, had had extended discussions on standards with the OFT." CMC said a month ago that they will not be using Rule of 78 on new business from 1 August.
A rival non-status lender, Transamerica Lending Company (TLC), said that the OFT report does not go far enough. Brian Robinson, director of retail operations at TLC, said that dual pricing and Rule of 78 ``are wrong and should be made illegal for mortgages".
Mr Bridgeman said in the OFT report that, after a warning in February, he continued to receive complaints. These included claims consumers were being persuaded to take out loans beyond their ability to repay.
Jeremy Paxman reveals he has heard senior Tories calling activists 'swivel-eyed loons'
Gay couple beaten in park urge MPs to moderate language on gay marriage
Strewth mate. Aussies wave goodbye to Britain as it becomes too pricey to stay
X marks the spot: The find that could rewrite Australian history
'There are empty spaces where there used to be living rooms, bedrooms, classrooms': President Barack Obama says America is praying for Oklahoma in wake of tornado that claimed 24 lives
- 1 'He was lucky he didn't die' - George Michael fell out of speeding car onto M1 motorway, according to eye witness
- 2 Austerity has hardened the nation's heart
- 3 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 4 Why Arsène Wenger must spend to put icing on the cake and buy likes of Stevan Jovetic for Arsenal
- 5 'It was just like the movie Twister': Man survives Oklahoma tornado by taking refuge in horse stall
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£180 - £230 per day: Orgtel: Operations Analyst - Leading Bank in the City of ...
£500 per day: Orgtel: A top tier banking client urgently requires Finance Busi...
£425 - £550 per day: Orgtel: Senior Finance Project Manager - £550 - Bristol -...
£150 - £250 per day: Orgtel: KYC Analyst - London - Banking - £150-250/day C...