Cutting back on the skills base is a false economy
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Underwriting is too important to be done by unskilled staff but this is where lenders have been slashing costs
BOB YOUNG: MANAGING DIRECTOR, CHL MORTGAGES
The Financial Services Authority’s feedback statement on the Mortgage Market Review highlighted a variety of opinions held by stakeholders.
One area of concern covered by a number of respondents involved lenders’ underwriting processes, in particular the degree of eyeballing of applications by lenders’ staff and the mandates they hold to progress cases.
By eyeballing I mean the requirement for employees to look at applications and their related documentation.
While this may seem like a common sense approach it is clear from the feedback statement that a number of lenders are not in favour of greater eyeballing because they think it leads to increased administration costs.
For me, this issue is wrapped up in the wider one of lenders de-skilling roles in certain departments. I believe that not only do we need someone to look at documentation, but they also need to understand what the paperwork is telling them about the case.
This used to be called underwriting - a skill that has sadly been lost at some lenders as they have sought to minimise cost per case by employing less skilled individuals.
The impact of this is evident every week in the pages of this magazine. Many advisers write in frustrated by the fact that nobody seems able to make decisions about cases - a symptom of the problem that there are few underwriters with the skills and mandates to make balanced judgements about applications.
The most important part of the collections process for lenders is the person on the end of the line
Unfortunately, this state of affairs will continue while lenders view some departments as only requiring low-skilled employees.
For example, it was recently drawn to my attention that one of the largest lenders in the UK has spent a fortune in the past year on IT systems and processes to improve its collections ability.
I heard the staff and the skills needed to carry out the job were not so high on the agenda and the phrase cart before horse sprang to mind.
Now the lender has somewhat belatedly realised that the most important part of collections is the person on the end of the line.
Their ability to build a rapport with borrowers, identify the problem, agree a solution and make sure that action is understood and agreed is crucial.
The lender in question had forgotten or ignored the point that systems and processes should be designed to help operators, not get in their way.
The first consideration should have been the operators and the skills they need. Unfortunately, in this instance the lender presumably misjudged what would be required.
In other words, by removing the requirement for operators to think about their role by using systems and process that do this for them it tried to de-skill the job.
It doesn’t take a genius to realise this is a huge mistake in the current economic climate. Of course, profit is important and nobody is going to pay more for a job to be done than it is worth at the moment.
But organisations should get back to basics - a business is only as good as the people who work for it.
They should stop treating staff as units of production and instead unleash their capabilities. They may be surprised at the result.
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