Alan Cleary, managing director of Precise, said unfair interest calculations on retained interest bridging deals look set to be the next PPI mis-selling scandal.
He said: “You only have to Google bridging and claims in the same search and on the first page is a company asking the question – are you owed a refund from your bank for a bridging loan?”
The practice in question, the method of charging interest on top of rolled up interest, has been flagged up by the Financial Services Authority which said it was concerned that customers were being misled.
Cleary told brokers at the Mortgage Business Expo today that they should not be looking at interest rates when searching for the best deal for their client but instead they should compare the total amount repayable.
He said: “What would you say if the borrower asked you why you had not recommended the cheapest deal?
“Brokers must consider whether the lender and its products are clear, fair and not misleading.”
And he added: “At Precise we have a simple rule which we think sums up responsible lending: if you would not sell this product to your mum and dad then you shouldn’t sell it to your customer.”