Solicitor Moore Blatch has slammed the FSA for ignoring its calls for investment warnings on all buy-to-let mortgages, warning brokers may now face the threat of litigation as a result.
The firm first raised its concerns a year ago, and called for lenders, brokers and the FSA to make investment warnings mandatory. It highlighted that with arrears and repossessions within the sector increasing at a high rate, the scale of the problem calls for immediate regulation.
It warns some brokers may now face the threat of litigation if any buy-to-let investor can support a claim the broker provided advice that went further than purely that of providing a mortgage.
Litigation lawyers could have a strong case against a broker if they recommended buying properties as an investment using a buy-to-let mortgage, it adds.
The repossession expert highlights that buy-to-let mortgages can be seen as heavily geared investment vehicles and, therefore, need appropriate warnings.
Paul Walshe, head of lender services at Moore Blatch, explains: "Action needs to be taken urgently to protect the interests of both brokers and lenders. We urge the FSA to ensure that buy-to-let investment is subject to the same consumer warnings as other forms of investment, particularly at this time when many amateur investors are facing substantial losses, and many can argue that they were not warned."
Moore Blatch is urging brokers who deal with buy-to-let to document they are not giving any investment advice and provide an appropriate investment-style warning. While neither are currently required by the FSA they could help support the broker's legal position if any client decided to take civil action in the future.Mortgage Solutions
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