Interest-only criteria tighten further By Samantha Cordon


Interest-only mortgages suf- fered further slings and ar- rows in early October as Roy- al Bank of Scotland stopped offering the loans except on an advised basis while Na- tionwide has pulled out com- pletely. A statement from RBS


said: “In line with our peers, we will require any customer applying for an interest-only mortgage to provide evidence of their repayment vehicle. Te advised sales process en- ables us to fully understand the customer’s circumstances


before making an interest


only recommendation.” Last month the Council of


Mortgage Lenders revealed it is working closely with lend- ers aſter Barclays’ new chief executive Antony Jenkins was quoted suggesting interest- only mortgages could be the next mis-selling scandal. A spokeswoman from the


Council of Mortgage Lend- ers said it had been working closely with members to look at the issue and establish the different


types of borrowers


who have interest-only mort- gages.


She said: “We are encour-


aging our members to com- municate regularly with their borrowers, who do not have adequate provisions in place to repay their mortgage, to help them back onto the path of a repayment mortgage.” Te statement came aſter


Jenkins told the Mail on Sun- day: “We are trying to com- municate frequently as these loans reach maturity and to help if a source of repayment for the loan hasn’t happened.” Ray Boulger, senior techni-


cal director at John Charcol, said:


“Jenkins is throwing


the door open for ambulance chasers to shiſt their focus to a new area of the market and you can expect cold calls to soar as they target interest- only customers.” Barclays subsequently


backtracked on Jenkins’ origi- nal statement claiming the comments had been taken out of context and there had been no suggestion that Bar- clays had mis-sold inter- est only mortgages,


rather


the industry as a whole and other banks have to work to- gether to pre-empt customer complaints.


AMI: Brokers warned to check sales processes He said: “We are not aware


By Samantha Cordon


Te Association of Mort- gage Intermediaries warned brokers last month to review their selling processes to avoid incentivising inappro- priate sales.


Clampdown widening Robert Sinclair, chief execu- tive of AMI, said it was vital brokers


didn’t get dragged


into the mire of mis-selling linked to high commissions


and sales bonuses. His comments came aſter


the Financial Services Au- thority managing director Martin Wheatley


said the


regulator was considering widening the clampdown on commissions to cover all fi- nancial products not just in- vestments. But Sinclair said it was unlikely the FSA would ban mortgage procuration fees and commissions on pro- tection products.


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of any intention to remove commission from the mort- gage and insurance markets but firms should review their existing structures to make sure that they do not have trigger points or minimum standards which encourage advisers to make sales when it might not be appropriate to do so.” However Sinclair said the FSA comments made clear


that all firms must ensure that any incentive schemes they have for their staff do not en- courage bad behaviour. Sue Anderson, spokes-


woman for the Council of Mortgage Lenders, said said: “Tis chimes true with a speech given by our chair- man, Martijn Van der Hei- jden, in June when he said we need to make a true cultural shiſt from a sales culture, to a service culture.”


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