Boulger: Income verification plan is ‘nonsense’
Boulger was responding to comments from Martin Hagerty, head of banking and financial institutions services at Equifax, who said earlier this week that lenders should update their information on customers to ensure they can cope with a rate rise.
“Automated income verification will help lenders take on this kind of exercise quickly and cost-effectively,” Hagerty had claimed. “It assesses whether the income the customer declared when the loan was originally taken out is still valid, giving the lender a sound foundation for the health check that follows.”
And last week the Resolution Foundation estimated that the number of customers struggling with mortgage repayments will grow from around one million to 2.3 million in 2018 due to rising interest rates.
The think-tank called on the Financial Conduct Authority to charge lenders with identifying vulnerable borrowers and offering them financial advice.
But Boulger said: “It’s nonsense to say you should go back and assess the income of millions mortgages.
“A; it would be costly and B; you can’t look at them legally.”
He also attacked the Resolution Foundation’s report, which suggested that the Financial Conduct Authority should charge lenders with identifying vulnerable borrowers, offering them financial advice.
Boulger added: “I think the report was wide of the mark anyway.
“Clearly there are some people who do need to be protected but the vast majority of people do act sensibly with their financial affairs. One has to get the balance right.
“Pre 2007-8 customers started off with higher interest rates, while if they’ve taken a mortgage out since the rate was stress tested to 7%.
“At worst they may have to cut down on lifestyles. People will do anything to protect the roof over their head.”