Regulation is approaching and we have entered the silly season. The interpretation of 'responsible lending' by some lenders has taken on a life of its own. BM Solutions' interpretation is to cut broker fees for sub-prime cases to remove the possibility of any bias toward those products that pay higher proc fees. This is a gross insult to the intermediary market.
If BMS wants to resolve this issue it should simply back-cascade products after credit scoring to the most appropriate level. If the case then moves from sub-prime back to status, problem solved. BMS has merely taken this stance to reduce proc fees and using Financial Services Authority rules to justify this is ridiculous.
BMS should get its own house in order first. Does responsible lending stop it demonstrating to its mortgage clients a clear, fair and not misleading set of guidlines for its practice in appointing surveying business? Why do our clients not have adequate opportunity for wholly independent surveys? What financial links exist between BM Solutions and its appointed surveyors? Why is there no transparent process of complaints on surveys? On accepting client money for surveys, who do they regard as their client, the survey company or the applicant? I think these questions represent rather more challenging issues then cutting proc fees.
BMS' stance on KFIs is another questionable area. It will not give information to the search software providers – why not? The situation is quite simple. The lender involved should issue an accurate KFI at offer stage in every case; the broker's initial information should not be seen in the same light and the rules allow for this.
In any case there are situations where the broker cannot issue an accurate KFI – legacy products anyone? Take your client from 2002 who has a fiveyear deal and now wants to move home by porting over the existing product and topping up his mortgage with a new product – try doing a KFI on that one. You can't. This means brokers cannot be held to account for KFIs in all cases, so again the onus passes to the lender.
This is another example of BMS using its interpretation of the rules to try and secure distribution. Responsible lending? I don't think so.
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