Banking giant, Royal Bank of Scotland (RBS), has today been hit with a £14.5m fine by governing body the Financial Conduct Authority (FCA), as a result of “serious failings” in its mortgage sales process.

The bank, majority owned by the UK taxpayer, was accused of not ensuring that advice given was suitable for its customers, in a review of 164 mortgage sales from 2012.

Just two of the cases reviewed were found to meet the standard required by the FCA, with the regulator stating that “in over half the cases the suitability of the advice was not clear”.

RBS, and its NatWest subsidiary, has now agreed to contact 30,000 customers from June 2011 to March 2013, in order to review advice given.

“A stark warning to people who would normally trust their bank directly with their mortgage requirements” says Sat Singh, managing director of specialist broker Contractor Mortgages Made Easy.

For many people, it seems obvious to approach the bank that you may have been with for a prolonged period of time, in order to facilitate a house purchase, but that is not always the best course of action.

“Whilst there is a level of trust there, sometimes over decades of banking history, it goes to show that it does pay to take some specialist advice – particularly as a contractor, given that it’s very unlikely that they understand the way in which you work, or receive your income.”

Following the FCA Mortgage Market Review (MMR) in April, lenders are under more scrutiny than ever before to ensure that advice is suitable, which could lead to problems for contractors who are unable to prove income in the conventional way.

“What we are beginning to see are the more conservative lenders, such as RBS, taking a stance with regards to mortgage criteria, which in turn has meant that mortgage approvals are becoming more and more difficult as contractors simply don’t know where to turn” added Sat Singh.

“By using a specialist broker, who understands your circumstances, you can ensure that you don’t restrict your borrowing potential by approaching a lender who will assess you incorrectly.”

Approaching a lender who does not recognise contracting in the right way really is fraught with danger as, if a lender was to assess you as self-employed and decline your application, even a specialist broker could be unable to help. Sat has one final, stark, warning.

“It really isn’t worth taking the risk. You’d take your car to a professional mechanic to diagnose and repair a fault; it really should be no different. Approaching a bank at will is almost irresponsible and could potentially cost you the home of your dreams.”

Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy

Media Contact: Raman Kaur, Public Relations Manager

Tel: 01489 555 080

Email: media@contractormortgagesuk.com