CITY regulator the Financial Services Authority (FSA) is expected to outlaw self-certification mortgages that don’t require borrowers to show proof of income.<br /><br />The FSA is to end the multibillion-pound “self-cert” industry by bringing in a legal requirement that will force lenders to insist on proof of income before handing out loans. <br /><br />The ban is expected to be a feature of the FSA’s mortgage market review, to be published early next week, which will usher in a series of reforms to the mortgage sector. <br /><br />The self-cert ban comes after the products were blamed for worsening the bubble in the housing market that collapsed in 2007, one of the key triggers behind the financial crisis.<br /><br />Experts have said the loans were being issued on a large scale to borrowers who were not able to keep up with repayments.<br /><br />One lender that offered self-cert mortgages, Northern Rock, collapsed in 2007 and had to be nationalised by the government. And HBOS and Bradford & Bingley, which also had to be bailed out, were among the biggest self-cert lenders. <br /><br />The mortgage review could also see new rules governing mortgages issued to buy-to-let landlords that borrow against a property they intend to rent out. <br /><br />The FSA has been fighting to show it can reform the financial services sector, after it was accused of failing to prevent the financial crisis with overly lax regulation. <br /><br />FSAchairman Lord Turner has pledged an end to the era of light-touch regulation, launching a series of reviews that are expected to recommend much tougher rules for the City.