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FSA delays hold back UK market recovery.

Financial Services Authority (FSA) under fire as authorisation delays from continue to hamper market recovery, says City law firm Reynolds Porter Chamberlain LLP (RPC).

RPC claims that the average time it takes the FSA to decide whether to authorize a company to carry out financial services work leapt 71% in the last year, climbing from 11.4 weeks in Q1 2009 to 19.5 weeks Q1 2010.

Pre-recession, financial services firms only had to wait an average of 7.5 weeks - Q1 2007

Speaking to Mortgage weekly, Mortgage Strategy, Jonathan Davies, Regulatory Partner at RPC, said: “Delays in authorizing new entrants into the financial services market damage consumers by reducing competition. They also damage Britain’s international competitiveness.

“The FSA needs to come clean on why it is taking longer and longer to authorize financial services firms. Are they implying that they were not checking new applicants properly a year ago nor are they just dragging their heels?.

“If the FSA does not have the capacity to process applications properly then it should say so.”

According to Davies, after collapse of Northern Rock it was widely understood that the FSA would need to exercise greater due diligence but that it seems absurd that the time taken is still rising over three years later.

Chris Gardner of Mortgage experts http://www.obligo.co.uk said “Mr. Davies of RPC right in questioning this - particularly when most firms experiencing delays are much smaller, simpler operations and nothing like Northern Rock – its bizarre that the FSA appear to be using a very large sledgehammer to crack a very small nut. These delays will hold the market back and consumers will be left with little or no choice”

Elaborating on his findings, Jonathan Davies of RPC went on to say it is clearly in the interests of consumers for new businesses to enter the financial services market.

He went on: “Delays prevent financial services firms from starting up, depriving the business of revenue and the public of additional services.”

RPC points out that some firms could be delayed much longer than 19.5 weeks, because that figure is just an average.

He adds: “Some of these authorisation decisions from the FSA might be breaching the maximum six month statutory limit the FSA is under.”

Why use Obligo to arrange your mortgage?

Banks forced to use cash to dodge FSA

With lending becoming ever more difficult experts are expressing surprise that the Financial Services Authority (FSA) in the UK has been so slow in granting new banking and lending licenses so says mortgage and property website obligo.co.uk

In recent weeks even the chancellor of the exchequer, Alistair Darling blasted the FSA for delays in speeding up the processes for granting new banking and lending licenses.

Reportedly there are nearly thirty banking and lending licenses either in the market or are in the process of being set up.

Spokesperson at property and mortgage website obligo.co.uk said “You would think that in this time of financial instability the FSA would make this a priority, how better to increase competition than providing more lending institutions?”

Even some of the bigger name companies in the UK have sought to fast-track their banking license woes; Virgin for instance is likely to launch Virgin Bank later on this year after acquiring its license through the takeover of regional bank, Church House Trust.

Other big players seeking to use this route are Walton & Co, the lender being set up by Panmure Gordon analyst Sandy Chen who is trying to acquire the stand alone banking license held by Hampshire Trust from National Counties Building Society.

There are also rumors that Manchester Building Society is in talks with an unnamed bidder for its stand alone license, Whiteaway Laidlaw Bank

Gardner went on to say “It seems that if you have money you can get around the delays by buying a small bank. It just goes to show the extreme actions that corporations are prepared to take to to cut through red tape. My only concern is that the additional money spent on acquiring these banks will be recouped from consumers in the long run – perhaps we will see small banks for sale on ebay!”

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Clock ticking for low interest rate time bomb

According to the UK Council of Mortgage Lenders (CML) repossessions have shrunk by 25% year on year. However mortgage and property website Obligo.co.uk argue that mass repossessions are a disaster waiting to happen.

According to statistics released from the CML today, the number of repossessions was 9,800, down from 10,600 in the previous quarter and 13,200 in the first quarter of 2009. Also there was a reported reduction in the overall arrears numbers.

However, mortgage experts fear that low interest rates may be masking a future problem and artificially making mortgages more affordable for beleaguered borrowers.

During the boom times many mortgages were granted from specialist lenders with cheap fixed rates for a limited period to borrowers with a poor credit history or were self employed. The rates after the fixed period were very high, although recently they have been forced down by low interest rates.

Experts argue that these kinds of mortgages are now a ticking time bomb as when normal market conditions resume these mortgages will double in interest rate overnight, in many cases to over 10% interest rates.

Mortgage Expert, Chris Gardner, of UK mortgage and property website Obligo.co.uk said “these types of deals are at rates today that are much lower than they would be under normal market conditions. Borrowers have found themselves with mortgages that are artificially affordable. When rates begin to raise the effect will be disastrous”

Obligo.co.uk calculates that the average £150,000 interest only mortgage for these types of mortgage will increase £625 per month to over £1250 per month.

Gardner went on “Clearly when rates rise back to pre-recession levels these borrowers will struggle to pay and many will get into arrears, and sadly then on to repossession. The problem is compounded by the fact that these self same borrowers cannot remortgage to cheaper deals with other lenders – the lending rules are now so tight for these kinds of borrowers that they now effectively mortgage prisoners – trapped in high rate loans they cannot afford”

Consumers who find themselves in trouble with a mortgage are urged to try renegotiate the terms with their existing lender if possible. In some instances lenders may reduce penalties and exit charges and in some cases have reportedly even paid borrowers to go elsewhere. If direct action with your mortgage lender fails find a reputatable broker and see what can be done. According to Obligo, even in the current market there are lenders who will listen if the loan to value and circumstances are right.

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Choosing a new area to live.

Right house maybe - Right area?

Many people moving house make the mistake of placing too much emphasis on the house itself without considering the implications of moving to an area that does not provide what they need to obtain family fulfillment. Before moving to a new area there are several things you can and should do to ensure you will be happy living there.

Green Issues

Going green can save you money.

Environmental issues are now part of modern life. Whether or not you are a supporter or a sceptic there is no doubt that environmental factors are now a consideration when making any kind of purchase. From a fridge to a trendy riverside apartment, the environmental or green attributes of a product are now a serious consideration with significant financial ramifications.

Worried about buying at Auction?

Auctions can be a great way to buy property cheaply. However, make sure you understand exactly how it’s going to work and who does what. If you understand the basics you will have much more chance of grabbing a bargain.

Green Tenants and Green Landlords

As a landlord, there are advantages to making your home, which after all is an investment, energy efficient. This not only may help cut fuel bills for your tenants but could also mean you get some much needed financial assistance in replacing key items such as boilers.

Benefit Tenants – how to make them work

I mean this purely from a landlord and rent perspective than any form of career advice!

In April 2008, the Local Housing Allowance (LHA) was introduced. This started the process of paying new claimants direct as opposed to the landlord as had been the case up till then. The objective was plausible enough – to give benefit recipients greater responsibility. The reality, despite government spin, is that the obvious problem of the landlord not getting their rent has often materialised.

Buy to let red tape strangling you?

It is now estimated that landlords in the private rented sector (PRS) are subject to more than 50 Acts of Parliament and 70 sets of regulation and more is on its way.


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Right house maybe - Right area?

Going green can save you money.

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