“Worrying cracks in the quality of mortgage advice,” was the comment from Clive Briault, managing director of retail markets at the Financial Services Authority, last week talking at the Mortgage Expo in Earls Court.
To anyone in the industry this is no surprise. What is more surprising is that Briault seems to think that the quality of advice has somehow slipped whereas I don’t think it was high to start with.
The majority of mortgage advisers were unregulated before Mortgage Day, and many still have not taken the full effect of regulation seriously, and consistently favour the soft option. And they are unlikely to change until they are slapped by the regulator.
I am sure I am not alone in my constant annoyance with the quality of both the advisers (a wander round the Expo all too graphically demonstrated this) and the advice of many so called professional mortgage advisers. Briault draws attention to a lack of focus by advisers in areas such as affordability, mortgages into retirement, interest-only mortgages and most worrying of all, the backbone of any regulated business, the varying and poor quality of training and competence schemes.
It is no secret that the FSA has, after allowing mortgage regulation a period of settlement, been conducting thematic visits this year and it is the results of these visits that worries the FSA.
Brokers need to understand that this is serious and they cannot afford to pay lip service to the regulator in the vain hope that they will not be picked on. This may be the case but this is career ending stuff and brokers would do well to lift their game while they still have time.
Regulation of estate agents is long overdue
At last estate agents are going to be regulated. Trade and industry secretary Alistair Darling confirmed this week that the Bill mentioned in the Queen’s Speech under the catchy title of ‘The Consumers, Estate Agents and Redress Bill’ would for the first time put the power back in the hands of the consumer.
Historically, estate agents have been the one loose link in the chain from a regulatory perspective in the house buying process and it is about time they became regulated. There are too many rogue agents in the marketplace and this will certainly help weed out the bad ones.
In my opinion it does not go far enough but it’s a start. Darling’s proposal, which had wide cross-party support, points to the appointment of an independent ombudsman with the power to fine estate agents who mess up and ban those who refuse to tow the line from the industry.
This comes on the back of a survey this week carried out by propertyfinder.com which says that the biggest villains in the house buying process were typically lawyers and lenders with mortgage brokers coming closely behind them.
A constant criticism concerning lawyers from respondents to the survey was their seeming insistence at writing letters instead of using email or God forbid picking up the phone to speed things along. No amount of Home Information Packs are going to change this type of archaic intransigence.
There is no excuse for not grasping all the benefits technology can bring to the house buying process, and this survey confirms what most of us knew all along – the majority of the blocks have little to do with the availability of information and more to do with the incompetence of the lawyer hiding behind the ever-thinning veil of legal rhetoric.
Retention schemes beat remortgages
So the Council of Mortgage Lenders says that the number of remortgages has contracted sharply since the introduction of widely reported retention strategies by lenders in the past few months, talk about stating the obvious.
Let me think, I can struggle to rebroke my client’s existing deal, do all the paperwork for a completely new sale, spend weeks pushing the case through, dealing with all the parties concerned and earn probably just a proc fee, or I could suggest the client stays put, fire a note over to the lender to confirm this and receive a proc fee for my trouble. I can’t think which one will be more popular.
The problem with these retention strategies is that it’s not particularly TCF (that’s treating customers fairly to those of you still ignoring the FSA’s latest battle cry) with the advice being made to fit the product instead of the product fitting the advice. This must also be an issue when it comes to putting together a compliant file. I can see why lenders have done this but I am sure there must be a better way.