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Make claims firms pay and they will end frivolous cases

I totally agree with Samuel Dale’s blog on Mortgage Strategy Online last week on claims management firms.

He argues that claims firms could soon start to damage the economy as the amount lenders are setting aside to handle complaints by these companies is digging into their lending ability.

Many claims management companies are causing havoc. But this has been happening to brokers for a long time and frivolous claims to the Financial Ombudsman Service are costing innocent brokers £500 per case even when the broker is found to have done nothing wrong.

Where were the big voices of the banks when brokers were up in arms? Sat back not giving a hoot. Now their profits are at risk, action is expected

Where were the big voices of the banks when brokers were up in arms? Oh yeah, sat back not giving a hoot. Now that their profits are at risk, action is expected.

This practice of making false claims is easily stopped – make the loser accountable for the costs.

Claims management firms would not be willing to risk paying any money themselves so at a stroke the claims would drop to genuine ones only.

Lloyds Banking Group has increased its claims pot by £375m, bringing the total to a whopping £3.575bn and Barclays has increased the total amount set aside by £300m, making a total of £1.3bn.

I’m sure no bank would begrudge paying out on a genuine case but when they are in effect being forced to pay every case as the cost of defending it makes it uneconomical then there is a huge problem.

This is an opportunity for every sector of the industry to come together and support each other. If we have one voice and one set of rules there is a chance to eradicate this cancer on our industry.

Name and address supplied

Scattergun approach of some claims firms should be outlawed

I read with interest the blog on Mortgage Strategy Online last week on claims management firms.

It should also be pointed out that the real story here is that normal law-abiding people are committing a serious criminal offence by making unsubstantiated claims for being mis-sold.

When you factor in the due diligence a claims management firm goes through and that in some cases it does not even establish if a plan has been sold, it makes me think that these large scripted claim letters are equally fraudulent on the basis that the claims cannot be substantiated in their entirety.

These companies work on a scattergun approach of throw enough mud and it will stick, which should be outlawed by the Ministry of Justice.
In court a lawyer would not be able to make 32 claims of failure in the hope that one sticks, the judge would throw out the case and probably reprimand the lawyer for such a reckless approach.

Chris

 

Companies do not make simple checks before complaining

I am a directly authorised broker and I have had to deal with a number of complaints from claims firms, over half of which are unfounded. I recently had two to deal with where no mortgage payment protection insurance was even sold.

The claims companies don’t know what they’re doing – writing to lenders instead of brokers and not understanding the time limits.

It seems they have one generic letter and are not carrying out a simple check of the Financial Service Authority’s register or Companies House to find out if the company is even trading.

I’ve even seen jobs advertised on a self-employed basis for document collectors for claims firms – no experience necessary of course.

Name and address supplied

 

Sending back shoddy paper applications is not a new approach

I was surprised to read some of the comments online last week about Nationwide confirming that it will return paper applications to brokers who fail to complete them with the required information.

Silly me, but I thought it was the actions of a prudent lender to automatically return incomplete applications.

The process should be fairly straightforward – the lender has a list of information it requires. The broker completes the paper application covering all the relevant sections and all supporting documentation, making sure everything that should be signed has been, and then drop it in the post.

This is what we always used to do before the broking world became so entangled with computers. We used to call it packaging the case.

But that was in the good old days when the lenders would lend and the BDMs actually understood the marketplace – not just targets.

Name and address supplied

 

What a shame that Portillion has given up on being a lender

I was saddened to hear the news that Portillion will no longer pursue becoming a mortgage lender.

The FSA does not seem to want to support small lenders in the mortgage market.


It’s a great shame for the staff who have spent years building the organisation and its systems.

I can only assume investors must have lost tens of millions of pounds while the directors have also suffered the humiliation of failing so publicly.

It is also bad news for the broking community as another would-be lender is extinguished.



I would like to wish all the staff the best of luck in finding jobs quickly.

Dennis Jason

 

Warning on property hijacking pertains to introduced business

The FSA recently warned brokers to be wary of property hijacking.

It says it has seen an increase in cases where fraudsters try to obtain mortgages on empty properties they do not own, which it dubs property hijacking.

I would like to point out that the warning here is about introduced business and a recent trend in some brokers allowing people they do not know, or do not know well, to channel business through them.

It is a big risk to allow someone to do this, as you may lose your livelihood for a share of one proc fee.

Robert Sinclair
Director
Association of Mortgage Intermediaries

 

Co-op Bank’s reason for interest-only on B2L is not justified

The Co-operative Bank announced last week that it will no longer be offering interest-only mortgages.

Its intermediary lender Platform will not offer interest-only on its residential range, but will still offer it for buy-to-let properties.

I loved the explanation on why Platform will still offer interest-only for buy-to-let.

It claimed interest-only could still be used for buy-to-let because the rent on the property is typically used to make monthly repayments and the value of the property is used as the repayment vehicle for the mortgage.

I don’t see how this justifies the continuation of interest-only for buy-to-let mortgages and not residential. Could it be that buy-to-let is unregulated?

Mike Snorkins

 

Risks on B2L lending are not the same as residential business

I read Mike Snorkins’ comments online and hope he does not offer advice on buy-to-let as his comments show he has failed to understand what buy-to-let is about.

Buy-to-let lending is different to residential, therefore the risks are not the same. Interest-only on buy-to-let is legitimate and responsible and reflects the fact that the property is an investment, which will be realised at some point – for example, by selling the property.

The same cannot be said for owner occupied lending. In reality, few people really want to sell their home in order to pay back their interest-only loan. This is the issue lenders are dealing with now.

I don’t mind Snorkins having an opinion, but at least make it an informed one.

Geoff Greenwood

 

FSA’s interest-only stance will not help economic recovery

I realise the FSA is full of good intentions but trying to put the interest-only genie back in the bottle now will only stifle the economic recovery.

Banks are starting to back-track on their interest-only offerings and are doing more than they need to in fear of the FSA which is ridiculous.

Come on guys, the public are not children, they do not need to be saved from themselves. The more you restrict underwriting policy the worse you will make things.

Name and address supplied

 

Media is putting out the wrong message to borrowers on lending

I read with interest last week that the recent increase in SVRs will result in consumers paying an additional £300m in mortgage repayments over the next year.

But why do these borrowers not seek independent advice? With great rates available and the ability to fix at 4% for five years you would think that brokers’ phones would be red hot.

I blame the media for not putting out the right message that lenders are lending and that borrowers can secure their future.

Phil Shelford

 

Mortgage prisoners are unlikely to notice good news on lending

I agree with Phil Shelford’s comments online, saying that the press is not putting out the right message regarding products and availability.

But I wonder if the public would even notice.

I feel sorry for those who are trapped in their deal with little chance of escape such as the self-cert cases and higher LTV clients in negative equity.

Name and address supplied

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