Even as I have been writing this letter I have had two calls from claims firms, one about charges and the other concerning payment protection insurance.
These firms need regulating.
They should also be made to pay for the broker’s time both when a complaint is not upheld, and when a complaint that goes to the Financial Ombudsman Service is not upheld. A good example is those numerous cases you get where they complain about PPI when it isn’t actually PPI, it’s life cover.
These firms should be made to pay for the broker’s time both when a complaint is not upheld and when it goes to the FOS
They should also have to repay the costs incurred by the broker as a result of the FOS looking at it.
These firms, with their false and vindictive claims, damage a broker’s individual record of complaints. Dealing with bogus claims also takes up people’s time when they could be looking at genuine problems.
If these firms were better regulated, if their staff were better qualified, then they would know that unless the client’s priority is lowest payment available, it would be incredibly rare for the mortgage at the top of the sourcing list to be recommended.
And even if that was the client’s only priority they might not even fit that lender’s criteria.
How long can these firms be allowed to trade?
MoJ stands idly by as brokers have their reputations knocked
I was incensed to read Mortgage Strategy’s lead story last week that data companies are selling claims firms information that shows which products were on the market at the time that the deal was carried out.
Claims firms then allege the broker mis-sold the mortgage if the customer was not recommended the deal that was the cheapest or the one that would have appeared at the top of the sourced data.
The Ministry of (in) Justice should have closed down all the claims firms and stopped solicitors touting for business years ago.
Instead, the MoJ stands idly by while these companies damage reputations and the financial wellbeing of firms dispatching good advice and good service to clients who would otherwise have been mis-sold by some banks.
And what is the Financial Services Authority doing about all those claims firms who relentlessly cold call despite knowing that the people they are calling have indicated that they don’t want to be contacted? The answer, unfortunately, is nothing.
FSA should tighten its belt instead of adding to our woes
I couldn’t believe the news last week that the FSA is increasing mortgage broker fees by almost 10%.
If only I could increase my income at the stroke of a pen.
The FSA should do what we have all had to do over the past three years – tighten its belt and get rid of the vast numbers of staff who are riding on its gravy train.
We are already a good way down the slippery slope of direct-only bank mortgages becoming all that is available – and the FSA is just continuing to exacerbate the problem.
Is this really Treating Customers Fairly and boosting consumer choice? I think not.
Speechless and Dumbfounded
Regulator seems to be trying to decimate broking community
Good old FSA, it always manages to pull a rabbit from the hat when you least expect it.
Now, could someone please explain how this actually works?
Mortgage brokers receive less income due to a collapsing market. To stay afloat they have to reduce their running costs accordingly.
The FSA, our gallant regulatory body, also has its income trimmed as its levy falls short, so what does it do? It makes mortgage brokers pay more. As Compare the Meerkat’s Aleksandr Orlov would no doubt exclaim: “Seemples”.
Does it really want to decimate the mortgage broking community?
Actually, I think I already know the answer to that.
Dazed & Confused
Don’t worry about bridging – users are savvy, lenders careful
Grey Haired Broker writes in last week’s Mortgage Strategy that properties being bought to hold are being funded with bridging finance and that this is a recipe for disaster given the relatively high costs of short-term finance.
If this was correct it would be a problem, but unfortunately the Grey Haired Broker is out of touch.
Borrowers who take out bridging loans are typically savvy property professionals acquiring properties below market value, or in need of refurbishment, who intend to add value by renovating.
Bridging finance is short term, and borrowers accept the costs because the loan enables them to make a return in the longer term.
Finally, a responsible lender would only be prepared to advance the loan if it was confident that the client had the relevant experience and financial standing to deliver the exit on time. Perhaps it’s time the Grey Haired Broker retired.
Richard King, BDM Bridgebank Capital
Shared equity deals can do more harm than good for FTBs
I was interested to read on Mortgage Strategy Online how, while visiting London mortgage brokerage Coreco Group, the mayor of London Boris Johnson pledged to expand a shared equity scheme helping first-time buyers in London.
It never fails to amaze me that people think these types of schemes are a good idea.
The sad truth is that some people can’t afford to join the property ladder, and encouraging them to buy a stake in a property is more likely to limit their social mobility and reduce their chances of getting better-paid jobs.
As a result this limits their prospects of being able to afford to buy further stakes in the property.
And with falling property prices these poor people get trapped in properties with negative equity from the outset.
This scheme is designed to keep house prices high for the benefit of existing homeowners. Surely there must be a better solution?
Cash not supply is reason young adults still live with parents
Research on Mortgage Strategy Online last week detailed the fact that in 2011 nearly three million adults aged between 20 and 34 were living with their parents, an increase of almost half a million, or 20%, since 1997.
This is despite the number of people in this age group being largely the same in 1997 and 2011.
Office for National Statistics figures show that at age 20, 64% of men and 46% of women were living with their parents in 2011.
The main reason for this is a combination of people not being able to fund large enough deposits to meet lending criteria and house prices being so high, rather than a lack of housing supply.
Until banks start lending again the former will remain a problem. Yes, increased supply might drive house prices down a little but it is not an isolated factor.
Of the first-time buyers and even home movers I see, those who do not buy generally cannot afford the mortgage, are unable to raise a large enough deposit or just don’t fit lenders’ criteria.
Name and address supplied
100% LTVs have a place if the correct controls are used
Industry PR John Wriglesworth stated at the Mortgage Business Expo in Manchester that both the sub-prime market and 100% LTV loans must come back for the housing market to recover.
Although it was generally a bad idea, there is a market for 100% mortgages for the right clients.
Thankfully, anything above that is long gone, and will never return.
I have a number of clients who have had 100% mortgages and the product has helped people on to the property ladder who in other circumstances would have struggled to save a deposit.
Ultimately, risk is the key word. If the right risk controls are put in place, 100% mortgages can certainly help kickstart the bottom rung of the property ladder and start to move the rest of the market forward too.
Sub-prime loans are fine if you have the right type of client
The reality in the debate over the ethics of selling 100% LTV loans or sub-prime is that there is a wrong and a right client for everything and any good adviser will have encountered both.
The genuine person who had some financial difficulties for a reason and has since been making repayments, should be allowed a sub-prime mortgage.
By contrast, the type of people who got into arrears because they couldn’t be bothered or were so disorganised that they continually made late payments should not.
Likewise with 100% mortgages – I don’t mean those that are available with a parental property guarantee – why shouldn’t people with a good credit history who can afford the payments have one?
It’s a risk for a lender and it would receive a higher rate as compensation.
But for those who would find the payments financially stretching or have a poor credit history – no.
For interest-only, why not allow it for the right clients, such as a person with a buy-to-let portfolio who will dispose of some to repay the ones they wish to keep.
Someone whose income is likely to increase – an accountant trainee for example – who could convert to repayment/overpay in the next few years, then why not?
Lots of lenders and brokers have abused this – though hopefully many of those no longer operate – and spoilt things for everyone else.
Name and address supplied Prize may vary from picture