I feel I should respond to the letter from Charles Haresnape entitled ’Restore consumer faith by cleaning up industry’ (Mortgage Strategy October 11).
It is astonishing that he feels we should embrace the Mortgage Market Review. That he should further summarily consign the self-employed to the mortgage bargain bin is plain nuts.
The danger within the MMR is not so much down to specifics such as interest-only or fast-track, but the future of distribution and who will call the shots.
It’s easy to agree that lenders will be responsible for affordability or proof of income in all cases, but where would it end up?
It doesn’t take much to see that lenders may end up with some kind of income verification by, say, sharing information from current accounts where salary credits could be used or using Inland Revenue data.
This would be a problem for brokers because lenders would just have to say – “Come straight to us as we can verify online in a few seconds if you use the correct type of current account or we can use Inland Revenue data directly in the same way” – and they would be able to provide an instant decision.
Where would that leave brokers? The answer is stuffed. Why would anyone want to go through a dual verification process or have two affordability checks done? We would simply not be party to data from the Inland Revenue either.
In an ideal world I like to see a ban on non-advised sales and independent verification of affordability by brokers for a small fee just as Energy Performance Certificates are carried out.
I’d also like to see controlled distribution so brokers do not need to be dependent on obtaining a mortgage for a customer to get paid, such as fees-only.
If the FSA wants total verification we can do that, but not if it means we as an industry are short-circuited by allowing non-advised sales to continue.
If there is any good news in any of this for brokers, it will be simply that things are going to get more complex in the mortgage world.
Complexity is generally good for advisers as it won’t be as straightforward for customers to push a button as before.
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