Irresponsible mortgage lending by Deutsche Bank mortgage division

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The UK lending arm of Deutsche Bank, has been fined £840,000 and ordered to pay customers £1.5m by the Financial Services Authority for “irresponsible lending practises” in the years leading up to the financial crisis.

This is the first time the regulator has taken enforcement action against a group for irresponsible mortgage lending.

The FSA criticised the lender over:

• the sale of self-certified and interest-only mortgages
•  loans sold to people approaching retirement

It also revealed that the company had

• failed to treat customers in arrears fairly
• made unfair charges for arrears
• and failed to highlight more suitable options for customers

The bank had not given enough consideration to how customers would afford their mortgages once they had retired and had failed to look at cheaper options for self-employed individuals.

It did not ensure customers with interest-only mortgages who were dependent on the property sale to repay the loan had thought about where they would live at the end of the term.

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Financial Services Authority

Fined £1.12 million for exposing their borrowers to financial loss.

Director of Enforcement for the FSA, Margaret Cole said  “The firm’s failings were serious because a large number of borrowers, including some with impaired or non-standard credit profiles, were put at risk of financial loss. The firm identified the systems and control failings in 2004, but despite internal recommendations that improvements be made, no corrective action was taken for more than two years. I emphasise that we expect high standards by lenders in their administration of their mortgage book.”

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