I was interested to read last week that Nationwide is considering taking a tough stance on paper applications by sending back poorly completed forms to brokers.
There are a few points I would like to raise. Firstly, what are brokers paying the £99 booking fee for? Secondly, most brokers should be able to fill in most of the stuff required on Nationwide’s form at the decision in principle stage, so I imagine cases where there is incorrect or missing information are rare.
And thirdly, if lenders were to give brokers more than a few hours’ notice when they withdraw products, it would help to solve a lot of the problems.
Any good broker who cannot fill in the form correctly because of insufficient warnings about a rate withdrawal would surely send a memo to the lender confirming any gaps as soon as humanly possible.
It seems it would make sense for lenders to give brokers at least a few days to get this memo to them, rather than just posting the application back.
The process works both ways. Would it not be better for lenders to tell brokers more accurately what they need at the DIP stage, rather than ask for certain documents with the full application on acceptance of the DIP? This way, brokers could submit the full application before an underwriter has actually looked at it and then send any additional information that is needed.
I don’t think most brokers would care how much lenders ask for at the DIP stage as this would save us from looking like idiots in front of our clients when a case is delayed and lenders would have all the information they need from day one.
Name and address supplied
Common sense must prevail if cases get sent back to brokers
The story last week on Nationwide considering sending back poorly completed paper applications to brokers was interesting and I am certain it has been considering this for a while.
Lenders often only accept paper applications for a few products that are usually complex and need a human to make a decision.
If it was just a case of making one phone call to a broker it wouldn’t be a problem, but past experience of underwriting tells me that it is usually more than this, and salient information is frequently altered throughout the application process.
The customer is then led to believe this is due to delays at the lender, which is often not the full picture. But I think a common sense attitude should prevail and I am sure Nationwide will not reject cases where missing information can be resolved by one phone call.
When brokers ask how much time it takes to make a phone call to the broker, the answer is that it takes about the same time as it does for the broker to get the information correct the first time.
Name and address supplied
Mortgage world is so far behind on online applications
When I read that Nationwide is considering taking a tough stance on poor paper applications, it made me realise the mortgage industry is so far behind the protection industry, it’s embarrassing.
Simple things like paying a lower proc fee for paper-based applications has been common in the protection world for many years now. In fact, the majority of business is submitted online now.
There is no reason why paper applications should be so commonplace in the mortgage world.
Name and Address supplied
Let’s claim against firms for claims advice mis-selling
A recent survey by Which? and MoneySavingExpert.com showing that one in four consumers don’t realise they are charged a fee by claims firms gave me an idea.
I’m starting a second business to run alongside my broking company. It’s going to be called ’Claim to claim again’.
My selling point will be – ’Have you been mis-sold or mis-advised on claims advice? If so then you can claim!’
I’m sure the Ministry of Justice would be on our side, or maybe not.
Not all claims firms mislead over fees charged to clients
Claims management companies got lambasted last week as a result of MoneySavingExpert and Which? hosting a payment protection summit.
Banks and regulators agreed at the conference to make consumers more aware that they can make claims for free through the Financial Ombudsman Service.
But I am unclear why claims firms are getting such a hard time. Yes, there are poor ones, but there are also good ones that make it clear to their customers the terms under which they will take on their claim. It is then surely the customer’s choice if they proceed.
There are good and bad in all sectors of business, and it seems a little rich that the institutions that have been responsible for the mis-selling are calling for tougher regulation on claims companies.
It could be said that if it was not for the claims firms then this particular area would not have received the attention it has and people would not have realised they had been shafted by our wonderful institutions.
It is also worth noting that although many IFAs sold the correct policies to clients, there are also a large number who passed their clients to a so-called master broker to arrange secured loans, who then sold the client a lump sum policy.
These brokers and IFAs are not blameless as they would have received a reasonable commission. This is not a case of tarring IFAs with the same brush but what I feel is a valid and balanced point.
However, I am sure it will generate the usual holier than thou response from some people in the industry.
Name and address supplied
Having protection would have saved millions in benefits
I enjoyed reading the article by Tim Eacott, compliance and operations director at Select & Protect, on the unsung benefits of mortgage payment protection insurance last week.
It was a good article and explains that protection is a must.
How the Financial Services Authority has not called unprotected lending irresponsible lending is beyond me.
Prime Minister David Cameron had a mandate to reduce state benefits but how many millions are being paid out because borrowers do not have life, critical illness cover or income protection?
And those who are receiving state assistance would be on interest-only – the monster the FSA twitters on about is a result of its failure to act. It’s a joke and while it remains unaddressed it will cost the state millions more.
It makes more sense to sell MPPI as a monthly premium
I agree with Eacott’s article on the benefits of MPPI. When I worked for NatWest I consistently argued that it should be a monthly premium, rather than added to the loan with interest being charged on premium.
But we were encouraged to sell it properly and do thorough questionnaires to establish eligibility. There are many things I will criticise my former employer for but that is not one of them.
I suspect many of the people complaining were sold it properly.
Solicitors are in the best position to warn leaseholders of risks
I had to disagree with the recent article by Geoff Hall, managing director of Berkeley Alexander, suggesting brokers should make leaseholder clients aware of insurance risks.
As introducers, we do not get to see the leasehold contract and it is the solicitor who has to confirm to the lender that cover is in place.
I am happy to make this clear to clients, but there are two major issues here. Most leaseholders are likely to be first-time buyers, with no experience, and the process of buying in itself saturates their capacity to take on board such important information.
Also, most lenders would prefer a block policy arrangement as the complexity of apportioning liability in the event of a claim is not in the leaseholder’s best interests as several companies could be involved.
Few understand that the rebuilding costs are seldom the same as the valuation. In this case, I believe solicitors get the information and it’s their job to explain the risks.
Perhaps making it a legal requirement that a building should be under one policy, regardless of how many dwellings it comprises, would be sensible.
Consumers in this case may lack experience and be vulnerable in protecting their most valuable asset while lenders will appreciate the implications only too well.
Brokers do not get the lease information – solicitors do. They are the legal experts acting for the buyer and the lender in most cases.
Freeholders often pass responsibility onto the leasholder
In response to Mary Lockyer’s comments, I found most of them understandable. This responsibility would not rest on the mortgage adviser if they were not advising on general insurance.
If introducing to another firm to arrange the insurance, the responsibility would fall on the insurance firm.
She is also right that it is best to arrange the insurance on the block as one policy.
But it is becoming more common for the freeholder to abdicate their responsibilities to leaseholders, hence the reason for my article.
If first-time buyers are mainly the leaseholders being asked to insure the property, their lack of financial experience makes the adviser and client relationship even more important in terms of understanding what needs to be done and ensuring it happens.
Geoff Hall, managing director, Berkeley Alexander