Aimed at borrowers who have trouble proving an annual income on paper, like the self-employed or salesmen, some lenders require no proof of income, simply allowing borrowers to state their income without evidence to prove it.
The Financial Services Authority(FSA) found that in 47 per cent of the 249 cases looked at by the regulator, the mortgage advice firm couldnt show why the adviser had recommended the loan and in 36 per cent of the cases it was unclear why self-cert was suggested as the best option.
Under mortgage regulation, which began in November 2005, all mortgage advisers must be able to show that before recommending a loan, the clients ability to repay it has been assessed.
The FSA stated however, it had found no evidence of systematic fraud among financial advisers and mortgage brokers.
Michael Coogan, spokesman for the Council of Mortgage Lenders, said: Self-certification is a big help to many people who do not fit traditional lending criteria. But we need to work with advisers to ensure that good practice becomes ever more widespread and to minimise the potential for misuse of self-certification
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