View more on these topics

Will intermediaries be able to trust the KFIs produced by sourcing

Whilst brokers are being tempted to get KFIs via lender websites, I&#39m sure most would rather retain their independence. Brokers are familiar with sourcing systems, using them to place mortgages or for comparisons. And if a client needs their mortgage re-broked it&#39s quicker to key it into a sourcing system once rather than into two lender sites. Also to master the complexities of each website illustration facility will be slow and painful (though some such as BMS and Halifax have excellent systems).

Sourcing systems are doing their best to convince us of their accuracy but I remain unconvinced. Consider exclusives. I doubt lenders will want to supply sourcing systems with the small print. I checked both the main systems last week for a shared exclusive we have. One had the product with an incorrect fee and the other didn&#39t mention it at all.

Also, lenders such as Alliance & Leicester pull rates at 24 hours&#39 notice – can a sourcing system cope with this? Quoting a client a rate which you subsequently find has been pulled is a mistake you should only make once.

To produce a correct KFI, many variables must be taken into account. We, like many brokers, have packaging rights with most lenders so clients pay for valuations based on our fee scale rather than a lender scale. And, like many other brokers, we charge fees for our services so these have to be taken into account. At present we use a customer relationship management package to produce illustrations. This lets us know when a client&#39s fixed rate is expiring or when the penalties finish. Most other sizable brokerages use similar systems.

The system supplier is working hard to ensure that we can be sure that the KFIs it produces are correct.

Yes, the regulatory clock is ticking and decisions must be made now. But there are still questions for both the lenders and the sourcing systems to answer.

The issue of KFIs and particularly their legal accountability is one of the hottest debating topics in the mortgage market. The concern is that advisers will have legal responsibility for a KFI produced by a third party. For lenders the situation is simple in that they will take responsibility only for KFIs generated by their own systems.

The adviser can access a KFI either directly from the lender or through a sourcing system. The first is an option that a number of lenders are offering through their websites. This would require the adviser to go online to numerous lenders&#39 websites to obtain KFIs for a lender&#39s products. Our feedback suggests this is not a process most advisers are willing to undertake.

The alternative is for the adviser to generate a KFI from a mortgage sourcing system. The FSA allows sourcing systems to produce KFIs in that it has stated that intermediaries are able to rely on &#39competent&#39 third parties for the production of KFIs. The FSA has created a tolerance regime for KFIs produced through sourcing systems. For systems like Trigold then, the onus is on us to prove that our KFIs are trustworthy and that we are a competent third party.

Producing an accurate KFI is down to accurate data and accurate calculations.

Trigold is implementing a verification process with lenders to ensure that the KFIs produced on our system are accurate. Each lender will receive a free copy of a special version of Trigold through which they preview their data and KFIs prior to the products being activated on our system. Lenders will then verify that the product data has been confirmed. All products listed in the software will show a verification for the reassurance of advisers. This accuracy combined with our sophisticated calculation engine will show advisors that our status as a competent third party is as valid as our KFIs.

Recommended

Lender accused of elitism

A broker has accused Newcastle of elitism over its refusal to offer its products to all brokers. Chelsea Mortgage Management says it recently contacted the building society with a view to doing business to it but was told that it only introduced to selected brokers, including Savills and Charcol. Simon Bucknell, business development manager at […]

UCB Home Loans hikes fixed rates

UCB Home Loans is increasing some of its fixed mortgage interest rates to reflect recent movements in the money markets. The rates are available from April 16 2004. The self-cert two-year fixed rate has increased by 0.30% to 5.59%, 6.5% APR; the self-cert three-year fixed rate by 0.20% to 5.69% and the buy-to-let two-year fixed […]

CHL sets out to woo self-cert customers

Capital Home Loans has launched what it believes to be the market&#39s cheapest self-cert tracker in a move to build itself a larger stake in the self-employed market. The tracker has been pegged to Bank base rate plus 0.74% until June 1 2007, giving it a current rate of 4.74%, to woo more self-cert customers, […]

Abbey goes live with integrated outsourcing solution

Brown Brothers Harriman has announced that Abbey has gone live with Infomediary, BBH&#39s integrated communications outsourcing solution. Abbey is using the messaging capabilities of Infomediary to overcome the data communication challenges of collecting trade instructions from its many external sub-advisers and feeding them directly into its own internal accounting system. Andrew Tucker, partner and head […]

Newsletter

News and expert analysis straight to your inbox

Sign up