Northern Bank is believed to be guilty of selling unregulated mortgages, and is now under investigation by the Financial Services Authority.
The bank is thought to have been selling UK mortgages from its office in the Isle of Man, without following Financial Services Authority guidelines, having believed that they were exempt from UK regulation because they were sold offshore.
Questions are now being asked about what will happen to the mortgages that were sold, and if they will be valid.
Northern Bank have confirmed that they are currently in talks with the Authority over what they call 'a difference of interpretation of the law'.
Our view
As ever this will be an interpretation of the FSA's Mortgage Conduct of Business Rules and will not be a deliberate attempt at breaking the rules.