Five mortgage intermediaries face punishment after the Financial Services Authority uncovered widespread problems in the way home loans were sold to people with poor credit histories. The Times. The Independent. The Guardian. Financial Times

Announcing the findings of a six-month review of the sub-prime sector, the financial watchdog admitted yesterday that it was surprised by the number of sales errors made by lenders and brokers.

The FSA review focused on a subsector of sub-prime lending called impaired credit mortgages, which are sold to people with county court judgments against them or who have been in arrears or with previous bankruptcies.

Mandy Spink, head of mortgages at the FSA, said: 'It was worse than we’d hoped. We’re concerned by the findings.'

The review found that 'significant numbers' of consumers had been advised by intermediaries to remortgage their houses, incurring early repayment charges, without good reason. Half of intermediaries did not check whether their customer could afford to repay their mortgage.