HIPs threaten independent advice

HIPs could threaten the existence of independent mortgage brokers as estate agents use the system to push clients towards their own financial advisers, says Sue Read

The house buying process in this country has long needed reform. Almost everyone I deal with in the industry agrees. The potential for transactions to fail is endless. Sellers change their minds after putting buyers to considerable expense. Surveyors find unexpected problems with properties or downvalue them. Lenders change their criteria, often in the middle of the underwriting process. Clients leave their jobs on a whim and disgruntled employers inform lenders to whom they’ve recently sent income references. Yes, this has happened.

Some of these things will always happen because they’re down to human nature, which in many cases is either pretty dim or pretty nasty. But some things that go wrong could be avoided by changes to the process.

I was initially delighted to hear of the introduction of Home Information Packs. But this early glow has faded and now I fear we face a fiasco with nobody knowing for sure what impact they will have, good or bad. Perhaps this is simply a fear of the unknown and maybe when we have a definitive picture of how the packs work, all will be well.

I recall the trepidation as mortgage regulation app-roached. Some of our fears proved to be unfounded. Some, such as the difficulties of producing accurate Key Facts Illustrations, were worked out during a period of confusion and frustration.

“The darkest days of my professional career,” I remember saying. Lenders and quite a few brokers were not geared up to providing the requisite KFI information quickly and for a while the advice process took weeks rather than days. We came through this, battle-scarred but unbroken.

Now we confront what could be an even greater change – one that could threaten the existence of independent mortgage advisers. Why? Because it could block the path of clients to our doors.

Mortgage regulation was inevitable and good. The HIP is a fine idea in theory – save possible repeat expenditure – and I applaud the sentiment behind its introduction. But theory is one thing and practice quite another.

I am concerned that estate agents will use the HIP system as a way to influence clients towards their own financial advisers. I am concerned that searches will need to be repeated, incurring additional expense. I’m worried that we are going to end up in a horrible mess.

A trial scheme is going to be carried out shortly so what would be wrong with a phasing-in period nationwide? I always thought this should have been done with the regulatory system, giving lenders and brokers the chance to sort out glitches before going totally live. And why on earth are estate agents not being regulated during this period?

Don’t get me wrong, I’m behind the changes and will work with them. They present opportunities, although we must seek them out.

I used to think the only difficulty I was likely to encounter with HIPs was the prospect of having one replaced in my senior years. Perhaps I should be planning for potential HIP problems sooner than that.