It was with great interest that I read Mortgage Strategy’s cover story last week about how the Financial Services Authority’s tough stance on authorisation was stemming the flow of new lenders entering the mortgage market.
As in any industry, new blood is vital to provide competition to the established order and ensure ongoing innovation and competitiveness for consumers.
It is understandable that the FSA wants to protect against the reckless lending that helped land the UK in its current predicament, but it seems counter-productive to operate such a strict door policy to the point where it is detrimental to the health of the market.
In the high net worth sector, the opposite seems to be occurring. Overseas and private banks have plugged the gap left by the anorexic appetite of high street banks to lend to wealthy individuals.
Many of these institutions are not bound by endless bureaucracy and approach cases individually, rather than dismissing enquiries out of hand due to a blanket ruling.
Overseas and private banks have plugged the gap left by the anorexic appetite of high street banks to lend to wealthy individuals
While the Mortgage Market Review acknowledged that high net worth individuals should be handled differently, so far mainstream organisations have failed to take this on board. Despite the grumpy gatekeeper, there have been some success stories in the past few years with Aldermore going from strength to strength and great things expected from the likes of Virgin Money and Tesco.
Being thorough is one thing, but the FSA must ensure it doesn’t cut off its nose to spite its face and hamper growth.
There are lessons to be learnt from healthy competition created by entrants in the high net worth sector.
Enness Private Clients
Rookie underwriters can land innocent brokers in hot water
I was interested to read Mortgage Strategy’s lead story last week about the 140 advisers who have been removed from Abbey for Intermediaries’ fast-track panel.
I have already taken the decision to opt out of Abbey’s fast-track system.
Like all bona fide brokers we have evidence of income on file at the point of application.
The problem lies with Abbey – its underwriting is hit and miss, and I fear that something an inexperienced underwriter misinterprets could land a perfectly innocent broker in hot water.
With a broken banking system and little wholesale funding, the appetite for lending is at an all-time low.
The new breed of underwriters fresh from their training courses will have an underwriting guide on one side of the desk, a fraud awareness manual on the other and a briefing note entitled ’10 tips on how to decline a case’.
Use belt and braces approach to avoid fast-track problems
Even when I use Abbey’s fast-track system I send in all documentation for fear of some kind of comeback down the line.
The scrutiny of payslips when it comes to things like London weighting, car allowance, overtime and bonus and deductions for pensions means there is room for misinterpretation.
I could not rest easy knowing a client may have their offer pulled at the last minute. I’d rather have upfront verification.
That said, I’d also like an equal playing field when it comes to rates although maybe that’s not much of an advantage.
I recently had clients come to me after being told in branch by Santander that they could borrow £413,000.
They placed an offer on a property but it turns out the branch adviser had not checked their payslips or their self-employed limited company accounts, so the clients could achieve nowhere near this amount in reality.
Guess who had the happy job of smashing all their dreams? These clients were existing Santander mortgage holders. Do we really still need to keep justifying ourselves?
Name and address supplied
Delays by clueless Abbey staff cost me money and a client
I too have removed my brokers from Abbey’s fast-track system after suffering a case in which one underwriter asked for a set of documents to support the case and then subsequently asked for a different set of documents.
We had no problem supplying documents but they didn’t seem to have a clue what they needed. After four weeks of delays and requests for more information the client withdrew his case, costing me over £1,000 in proc fees and a good client.
If Abbey’s underwriters don’t know what they need how can we second-guess them?
Name and address supplied
Fast-track issues are proof of inadequate compliance regimes
I do not understand the comments on Mortgage Strategy Online about Abbey’s decision to remove 140 advisers from its fast-track panel.
It has made a commercial decision to allow some cases to be fast-tracked to speed up processing, which I am sure all brokers agree is a good thing.
Networks require brokers to hold proof of income anyway so they should have all the documentation Abbey needs if it wants to audit the file. The audit process delays the process but surely brokers would prefer to have the fast-track facility there?
If brokers are continuing to abuse fast-track this is a failing with networks’ compliance regimes if documents are not provided to verify the declared income.
Government has to prevent claims firms from breaking rules
An open letter to secretary of state Kenneth Clarke on the regulation of claims management companies
Ata recent meeting, senior representatives from Which?, MoneySavingExpert.com, financial services providers and the Financial Services Ombudsman discussed ways of improving confidence in the payment protection insurance complaints system.
This is a large-scale issue,with almost £9bn provisionedby institutionsand affectingmillions of consumers.
We agreed that more needs to be done to help those who have been mis-sold PPI and together we have committed to taking further action.
However, we also believe the government has a critical role to play to help consumers and the industry, by ensuring third party complaint handlers are properly regulated and bad practice is stamped out.
While we acknowledge the recent steps taken by the Ministry of Justice in this area, we believe that further action is urgently needed.
There is significant evidence of rule-breaking within the claims management sector, an industry that hasgrown significantly, andbelieve that regulation and supervision of it has not kept up.
Recent researchfrom MoneySavingExpert.com and Which?found that a quarter of people did not know that these firms take a fee, and only half knew that by using a claims management company they would be no more successful than making the claim themselves.
The result is thatconsumers arelosing out now and will continue to do so unless action is taken.
Misleading advice, unfair contract terms and a lack of transparency about fees are common and there is little consumers can do to gain redress when they occur.
It is likely that the bulk of the moneybeing set aside for PPI redress will be distributed over the next year,so it is essential action is takento encouragebetter supervision, self-regulation, tighter regulation and enforcement action by the MoJ.
We are also concerned that the proposed consultation by the claims management regulator on the conduct of authorised persons rules is being delayed.Any delay in much-needed changes to drive out the poor practice of some claims firms will only lead to further consumer detriment and additional costs across industry.
In light of our concerns, we would like to discuss this matter with you further and will be in touch with your office to request a meeting.
British Bankers’ Association
Lenders should pay extra if they slip up on service standards
So lenders want to pay brokers less commission if they send in poor or incomplete applications.
Fair enough I would say, as I always try to make life easier for my clients, lenders and of course, myself.
But does it mean that if I send in a perfect application with all relevant supporting documents on time and the lender messes up, that I can claim more commission from it?
Recently I have tracked cases only to see nothing happening, then called the lender to be told that the application has been allocated to the wrong system with Coventry Building Society or that nothing has progressed on the case with Northern Rock, both for no apparent reason.
In the case of Coventry, it meant the supporting documents that were posted to it on the same day as the application was submitted were not allocated to that case. When the case was actually set up on the correct system, the documents were then requested as outstanding.
Lenders seem to be saying that brokers must adhere to strict time limits, regardless of their workload, or be penalised for it.
And yet lenders can publish service standards of 14 days for submitted documents to be looked at and they can take 25 minutes to answer the phone.
If lenders want to impose proc fee penalties in the name of service, let them pay extra when they do not adhere to the standards.
How about setting service standards for themselves – so three days for a document to be viewed, then paying out £10 a day for every working day that they go over their standard?
Mortgage and insurance consultant