Lenders defend cascade systems

Lenders have hit back at Mortgages PLC’s assertion that cascade underwriting is not in borrowers’ best interests.

MPLC had warned brokers to treat cascade underwriting with caution before recommending an alternative product from the same lender to a client.

Peter Beaumont, sales and marketing director at MPLC, says: “Cascade underwriting works to the benefit of lenders but not necessarily borrowers or brokers. There may be more suitable products available from other lenders and brokers must remain mindful of their responsibilities to clients. There is scope for brokers to fall foul of regulation by endorsing a product put forward by a lender because it’s convenient to do so.”

But Jeff Knight, head of marketing services at GMAC-RFC, says Beaumont’s comments smack of sour grapes. He says: “The truth is that MPLC’s business has been hit hard by GMAC-RFC and Platform because it has been left behind in the technology stakes.

“Online cascade facilities are in the broker’s and client’s interest. Besides, the broker’s regulatory responsibilities have not been removed.”

And Paul Hunt, head of marketing at Platform, also defends the practice as beneficial to customers and brokers as well as lenders. He says: “The cascade system is valid as it takes the client’s circumstances into account and enables the lender to assist the broker, saving time and effort for everyone.

“This is Treating Customers Fairly and in the spirit of regulation.”