Insurance Overview

1. Credit Lending 

First Trust offers a 75% standard LTV (loan-to-value) rate to mortgage borrowers, rising to 90% for first time buyers. This compares favourably with the FSA’s Turner Review suggestion that LTV rates be set at 90%, i.e. that borrowers should have at least a 10% deposit for a mortgage. 

The bank has set its LTI (loan-to-income) rates at 3 times gross income for single applicants, against comparing favourably with the Review’s analysis which suggests lending to 3.5 times of income for single borrowers. 

The bank automatically conducts searches with a credit reference agency for all loan applicants through its New Applications Processing System (NAPS). 

It explicitly states that it does not solicit customers with unrequested increases in credit limits (i.e. on credit cards or overdrafts). 

2. Debt Warning 

The bank offers the following generic warning to mortgage and secured loan customers: ‘Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.’ Warnings about unsecured credit were found in relation to credit cards only. 

First Trust uses a ‘Borrowing Wizard’ to calculate monthly loan repayments. However, it is just a calculation, with no related warning system and it is not clearly related to debt management. It does not refer customers to the FSA Debt Test or an equivalent. This facility is designed aims to help customers find out whether you have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulty. 

3. Debt Management and Advice 

First Trust recommends that customers experiencing financial difficulties talk to them at the earliest opportunity and provides a list of possible circumstances personal and business customers may find themselves in.

The bank states: ‘With your [the customer’s] co-operation we will help develop a plan to deal with your financial difficulties, consistent with your interests and ours and we will tell you in writing what we have agreed. We will also liaise with debt counselling organisations such as Citizens Advice Bureau, business support organisations or your professional advisers where you give us permission.’ 

It is not specified whether this applies to customers with secured credit (mortgages) or just those with unsecured credit. 

Furthermore, no information was available regarding possible payment breaks/holidays for either secured or unsecured loans, though the bank stated in its response to our research that if customers fall into arrears options explored with them include restructuring, interest-only payments or a moratorium. 

No evidence was found that the bank offers re-housing advice to customers facing possible repossession or if it liaises with organisations such as Shelter and the Citizens Advice Bureau.