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Hysterical aversion to risk could bring


Former Prime Minister Tony Blair may be about to publish his book about his life journey but I suspect most mortgage brokers could write a book called ’Descent Into Hell Since Mortgage Day’.

For example, due diligence now seems to trump the Data Protection Act when it comes to putting in an offer for a property and applying for a mortgage.

For some months now we have had to supply proof of deposit along with stringent affordability criteria.

This thirst for ever more information about applications resulted in Halifax telling us recently that an offer we had received had been issued in error.

A few days prior to exchange there had been an implication that if we did not provide information on how our client obtained the savings he held in legitimate UK accounts the offer may be withdrawn.

We told Halifax it was impossible to obtain a paper trail of how the funds in four savings accounts had been accumulated as this would mean approaching third parties unrelated to the client’s confidential application.

The client actioned the transfer of money from the four accounts to his current account and then provided the solicitor with the appropriate deposit. But on the day of exchange Halifax refused to release the funds. After much arguing with the lender the client did eventually exchange and complete.

Thirst for data means clients are getting edgy about their bank account details being distributed all over the place and who can blame them?

But the point is that if a UK bank receives savings into an account, surely it is the bank of origin and should be responsible for ensuring the money has not been laundered.

Because the Financial Services Authority has turned its attention to fraud the industry is overreacting in response.

Estate agents no longer accept offers on properties unless they have conducted due diligence and seen proof of deposit monies in accounts – usually photocopied and left in a filing cabinet that could be opened with a penknife.

As brokers, we then repeat this exercise and send 20-page faxes to various bank addresses, most of which seem to be in Glasgow. Obviously, there’s a huge black hole swirling around Glasgow as information often goes missing and has to be faxed for a second or even a third time.

Meanwhile, clients are getting edgy about their bank account details being distributed all over the place and who can blame them? It seems that everyone is assumed to be a money launderer unless they can prove otherwise, these days.

Has the FSA lost all sight of treating customers fairly? And who instructed the National Association of Estate Agents to tell its members to conduct due diligence in the manner described above?

The industry and the FSA should calm down about this whole subject and fast, as the property market is heading for a seizure. Double-dip recession, anyone?




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The mortgage Mole



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