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No loss, no fee rule would curb ambulance chasers

I was interested to read last week that the Financial Ombudsman Service is planning to increase the number of free cases that businesses are allowed from three to 25 in 2013.

It says the aim is to ensure that in the future only 1% of businesses pay any case fees. Clearly the problem that brokers have been experiencing with ambulance chasers has been addressed in the increase of free cases.

While this seems to be the wrong way of dealing with the issue, at least it has been addressed in some small way.

But this will not stop claims companies that have nothing to lose by submitting cases. I think we all agree that there needs to be a right to make a complaint and putting barriers in the way of this would be the wrong thing to do.

Having said that, we cannot continue to allow an innocent party to be held liable for costs.

There are enough no win, no fee companies out there that will submit claims galore. Until there is a financial disadvantage to this, the practice will continue.

How about a no loss, no fee agreement between the adviser and FOS? No free cases, just a situation where you will not pay for winning a case. Once a case has been proven to have no foundation, the broker could then apply for the costs to be covered by the claim company, for which the FOS could make a ruling.

At a stroke this would prevent spurious claims by ambulance chasers and lay the liability for the cost firmly at the door of the party that loses the case.

FOS costs would be reduced as there would be much less work involved. This type of thing seems to work well in every other industry – why should we be any different?

Name and address supplied

Brokers will always originate the bulk of mortgage lending

In last week’s Mortgage Strategy there was a letter from somebody called Paul, who argued that contrary to some of the fearful comments in the wake of the publication of the latest Mortgage Market Review paper, brokers have nothing to fear from high street branches.

The history of mortgage lending in retail banking is that intermediaries are not preferred initially but branches consistently under-deliver and lenders turn back to brokers to make up the shortfall.

This, coupled with a growing need for clients to have advice on product choice and suitability, means brokers will always originate the majority of mortgage lending, and quite right too.

I wonder if the increasing burden of regulation will make lenders review the viability of branch-based advisers.

Charles Haresnape
Managing director
Aldermore Mortgages

Shelter survey based on representative sample of UK adults

In response to the letter from the No Hair Mortgage Underwriter in the last issue, which criticised our data on payday loans, I would like to clarify that the YouGov survey commissioned by us on the number of people using payday loans to pay their rent or mortgage was based on a nationally representative sample of 4,014 adults.

This is considered to be a large sample size for such a survey, with a margin of error of just 0.43%.

As is the case with many representative surveys, the results were extrapolated to give a sense of the bigger picture and the methods used were checked and endorsed by YouGov’s independent research team.

As a housing advice charity, Shelter’s main aim is to prevent consumers from losing their homes.

We know from the people who come to us for help every day that using payday loans to pay rent or mortgage costs, even as a short-term solution, can put homes at risk.

Stories such as these are a proven way to raise awareness of the dangers of this type of debt and to urge people who are experiencing debt problems to seek free, independent advice.

Kay Boycott
Director of policy, campaigns and communications

As an ex-broker, let’s hope Cornell brings reality check to FSA

It was great to see my old friend Jonathan Cornell securing a job with the Financial Services Authority before Christmas.

For years the FSA has been making decisions wearing one hat that tries to fit the whole of financial services. This has caused the over-regulation of mortgages and unnecessary fees and reviews of what we do.

To be fair, I do acknowledge that more recently it has tried to understand that the world of mortgages is different to pensions and the like, but progress is slow.

Employing former mortgage brokers will hopefully give the FSA greater insight into life on the street and how its decisions can, or cannot, be implemented in the real world.

Having an in-house reality check before going live on new initiatives can only be of benefit to us in the industry and I welcome this approach.

I expect Cornell was inundated with Christmas cards containing requests from his contacts across the mortgage world and is making notes of everything good, bad and indifferent.

For me, the poacher turned gamekeeper is definitely the way forward and here’s hoping we see a fresh FSA in 2012.

Robert Winfield
Chartwell Funding

Accord credit scoring will thwart attempts to get high LTV deals

Last week Accord Mortgages launched into 90% LTV lending with a range of two and five-year fixed rate products.

This provoked one broker to comment that with the lender’s credit scoring, brokers would be lucky to get one in 100 cases through at the 90% LTV level.

In response, another broker commented on Mortgage Strategy Online that while processing is on the slow side, “my Accord BDM is on the ball and I have every confidence with getting deals done with the lender”.

Fair enough, but the BDM cannot influence the credit score. The credit score requirement is evidently high and even at 75% LTV I have had a number of professional applicants on good incomes declined.

It may be more prevalent in London where people tend to move about, more often when renting and neglect to register on the local electoral roll, but if you are a first-time buyer and not on the electoral roll, it seems you can forget trying Accord.

As the majority of people interested in 90% LTV lending will be first-time buyers, I think it is fair to assume that there will be quite a few disappointed faces.

It is a good move, however, and hopefully more lenders will re-enter this market soon.


Starter homes were victim of meddling by the government

I was interested to read the article from Jason Orme, editor of Homebuilding and Renovating, in last week’s issue, on empty homes in the UK.

Commenting on the spate of television programmes focussing on empty houses, Orme made the point that restoring those homes back to the market was not as easy as the programme had made out.

“That’s not a scandal – it’s just the nature of the complex housing market in which we operate,” he concluded.

Comments on the article on Mortgage Strategy Online argued that it was European rules that were essentially holding the market back and adding to building costs.

But not as much as some of the proposed solutions add to householders’ costs going forward, such as whole house heat recovery ventilation, which is a nightmare.

What really stuffed starter homes for first-time buyers, however, was the introduction of Part M of the Building Regulations in residential building by the 1997 Tony Blair government.

This added a wheelchair accessible ground floor toilet to all houses – cue the death knell of the two-bedroom new-build house.

By the time you have made it wide enough for the disabled WC, you have a house that will take three bedrooms on the first floor. So modern copies of the old two-up, two-down house can no longer be built.

Every time the government interferes in the marketplace for houses it adds to the problems, not to the solutions.

Mark H

Councils need to be trained to get empty homes back in use

Just because empty homes are in areas where people don’t want to live and are more trouble than new-builds to bring back into use, does it mean we should give up?

Local authorities need to take tougher action on long-term empties.

I train local authorities across the country and they simply need a little education on all the tools available to them, and recognition from the government that it is acceptable to take away a home from someone who is not using it and give it to someone who needs it.

Paul Palmer

GMAC-RFC case is unlikely to reduce negligence claims

With regard to last week’s lead story titled ’Negligence claims could drop after GMAC-RFC vs Countrywide verdict’, the case is a straightforward claim on the basis of valuation.

To extract the headline you have from the facts defies logic. If you read the details of the case, the experts found that the valuation itself wasn’t negligent.

The judge said that had it been negligent and the court found against the valuer, the extent of the damages would have been reduced by virtue of the less than adequate underwriting.

OK, that might mean that some lenders will think twice before making a claim, but the majority won’t. And, more to the point, reducing the damages awarded by 60% is better than nothing, especially when you take into account costs.

I don’t think this case will have any impact on whether lenders make claims.

Robert Williams



Mortgage repayments in September 2011 were at their lowest in 10 years

Mortgage repayments fell to their lowest level in 10 years in September 2011, research from Barclays revealed last week. Analysis of over one million customer accounts showed that the average monthly mortgage payment hit its lowest level since 2001 in September, at 15.2% of take-home pay, or £488 a month. For 2011 overall, payments accounted […]


Speed is of essence when calling leads

Over the last few years I have written a lot of articles about lead generation, many of them containing advice for advisers on how to generate a better return on their spend.


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