Concern is mounting among brokers who feel the burden of assessing a client’s affordability is falling on them rather than lenders.
Brokers claim that since regulation, lenders have amended application forms to shift the onus onto brokers.
Paul Banfield, consultant at Best Advice Financial Planning, says: “It’s a danger for brokers. I don’t mind having the responsibility but not if it is solely mine. It is a good idea for both parties to do checks, but following regulation carrying out checks has been placed on the doorstep of the broker.”
Frederick Ahmed, sole trader at Arbor Financial Services, says he was having problems with a lender who would not carry out an independent affordability check on his client. After confronting the lender, it has now agreed to carry out its own independent underwriting on the case before deciding how much to lend the client.
Ahmed says that it appears lenders are attempting to abdicate their duty for responsible lending under MCOB 4.7. He says: “They seem to be taking the view that because brokers are now regulated and subject to MCOB 4.7, the lenders do not need to carry out their own checks and assessments.”
Another lender, Portman, says lenders are not shifting the responsibility. Paul Howard, associate director at Portman, says: “We have always been happy with the level of checks carried out. However, under new FSA regulation and responsible lending rules we thought we should make an additional assessment of affordability.
“We are running a behindthe-scenes affordability test, where we carry out an assessment of the person’s net income in relation to the mortgage to double check.”
Robin Gordon-Walker, spokesman for the Financial Services Authority, says: “MCOB rules place requirements on lenders for responsible and affordable lending.”