A number of things have caught my eye recently chief among them the comments from Chris Cummings, director-general of AIFA, to the effect that mortgage brokers must improve their administration skills drastically if they want to cut costs and avoid incurring the wrath of the Financial Services Authority.As we all know, keeping records of what products we recommend to clients and why we recommend them is vital. We must be able to show an audit trail to an FSA inspector if asked. That trail will include full client information detailing their situation, their requirements and their ability to afford the loan – especially in self-cert cases – and information on how we whittled down the mortgage schemes open to them to just one. But our job is still an inexact science. Sometimes the reasons for our ultimate recommendation, assuming all aspects of the schemes such as rates and charges are pretty much the same, will come down to more subjective matters such as service and flexibility. My understanding is that as long as we can justify the recommendations we made – even if it is something as arbitrary as the service which we receive from the lender – we will be compliant. So this means we must keep on file details of the schemes we did not recommend. I’m not suggesting we should have details of every scheme on the market at the relevant time stored away somewhere so we can show we did at least look but I am saying we ought to have details of the close seconds on the files. I do this by keeping KFIs for the deals I rejected. I also write a report to the clients confirming the reasons for my recommendation and why I have rejected other schemes. I know we’re not obliged to send a suitability letter anymore but effectively that’s what I’m doing. But Cummings is right. We must ensure our admin systems back this up. For my firm, that means more paper on file. We are working towards the nirvana of scanned files but haven’t quite made it yet. It’s tedious and time consuming but it has to be done. The admin staff who support me are great. On the whole we do a pretty good job. But we are not complacent and there’s scope for improvement in most systems. The trouble is that when a mortgage is being done there is such a mountain of paperwork to be dealt with that it is easy to omit something. And that is the thing that’s going to come back and haunt you. I know I’ve missed things in the past, usually because I’m pressed for time. So my plea this week is that we should each spend a bit more time with our admin staff making sure they know precisely what is required of our companies under FSA regulations, and help them improve our own systems so that we are 100% right. Our administrators are valuable people. I know this as I’ve done the job. They can make our jobs easier and more productive. We in turn must ensure they are properly trained and motivated. We will all benefit – and be safer from FSA scrutiny.
From S Akhtar It is with great regret that I write this but two recent events compel me to. The first case I would like to highlight concerns BM Solutions, which I use on a regular basis. I applied for a buy-to-let mortgage with this lender for a good introducer client on a property his […]
Skipton has launched a three-year fixed rate mortgage at 3.99% – equivalent to initial monthly payments of just 528 for a 100,000 repayment mortgage over a 25-year term. Jennifer Holloway, head of media relations at Skipton, says: “Feedback from our branches and brokers is that fixed rate mortgages are still the loan of choice for […]
Mortgages PLC is unveiling a new look logo and corporate identity, which will be officially launched in January 2006.The brand identity will replace the current black house logo, which has been used by MPLC since its launch in March 1998. The new identity will be applied to all documentation and promotional material and the rebranding […]
The Council of Mortgage Lenders has pledged its support to the government’s plans to extend home ownership. In his introduction to the CML annual conference, Stuart Bernau, chairman of the CML and commercial and communications director at Nationwide, told listeners that targeted intervention is welcome but only if it delivers real benefits to consumers. These […]
According to George Osborne “people like Isas – because they’re simple”. Fiona Tait is not convinced… Contributions & bonuses What he said: “From April 2017, anyone under the age of 40 will be able to open a Lifetime Isa and save up to £4,000 each year. And for every £4 you save, the Government will […]
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