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Surveyors call for FSA to investigate mortgage lenders

The council of the Residential Property Surveyors Association has written to Hector Sants, chief executive of the Financial Services Authority calling for an investigation into the advice mortgage lenders give their borrowers.

It claims only one in five homebuyers obtain a survey or condition report on the property they are buying, yet 80% of homebuyers believe that they get a survey.

It says the main reason for the discrepancy is that most mortgage borrowers believe that their lenders’ valuation is a survey.

Lenders it says do little, if anything, to disabuse their customers of this notion, it says because they make so much money out of valuation fees.

It claims lenders put the responsibility on the buyer’s lawyers by way of their lenders handbook and that the clause recommending a survey is buryed in their terms and conditions or letter of engagement which most clients do not read.

Alan Milstein, council member at the RPSA, says: “It is time for lenders to take responsibility for providing their clients with proper advice. They should make it explicit to their borrowers that the valuation they procure is for their purpose alone and says nothing about the condition of the property. They should advise homebuyers to get a survey or condition report and take a written signed instruction to this effect.

“If the only way that lenders will take responsibility is by way of dictate by the FSA then that is what must happen. That is why we as a Council have written to Hector Sants to take urgent action to investigate this issue.”



Broker relationships will drive innovation

A common theme developed when I spoke to lenders and brokers at the recent Mortgage Business Expo. Nestled within comments about how the market has become boring, gone too vanilla and no lender seems to stand out much these days, the theme was that the market was crying out for some innovation. Winston Churchill said […]


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  • Kevin Vella 15th June 2011 at 4:21 pm

    I think one thing is for sure is that the whole survey/valuation process needs re-vamping.

  • Charles Bunbury 14th June 2011 at 10:43 pm

    All things being equal RPSA will more than likely get what is being asked of the FSA. The FSA has been has hiding behind the skirts of consumer protection while milking others including consumers. Whose interest is being served by the restrictive placement of convertible term? One thing for sure it’s not consumers. Clearly the FSA has assumed we do not understand inheritance tax and would not want to protect our clients without filling their pocket by paying for investment authorisation. I wonder who will be blamed for miss selling when the public realise that future billions that will go into the pocket of the Inland Revenue could have been paid with the use of this option. The sad fact about this restriction then revenue will still get its billions. I assure you all that this message has not been posted because you or I will be making billions from the commission received because convertible term benefit has be added to protection policy

  • KJB 14th June 2011 at 8:32 pm

    Chris is arrogant and incorrect.

    Many buyers have no idea what that the basic valuation is just that. They think they are paying for a “survey”

  • Paul Simons 14th June 2011 at 6:01 pm

    If I were to sit on the fence and get a thorn stuck in an unpleasant place, it could be said that lenders could be more clear about the service they offer. I’ve got 2 examples for you from two of the major lenders in the UK (Abbey & Halifax);

    Abbey: A ‘Valuation for Mortgage
    Purposes’ will be carried out by Abbey as your mortgage lender. You may also want to have a more detailed Home Buyers survey carried out for your own peace of mind, especially if the property is old or run down.

    Halifax: When you’ve found the home you want you’ll need to know what it’s really worth. You can find out for sure by arranging a valuation or survey before you make your offer.
    Halifax will get a valuation for the property you want to buy, but if you want a closer examination, for added peace of mind, we can help arrange a survey for you. A valuation is an inspection of the property to ascertain it’s acceptability to the lender as security against the mortgage loan, for which the borrower may have to pay. We always carry out what we call a level 1 Halifax valuation report.
    If you prefer, you can request a more detailed valuation or survey.

    I think both lenders (and these are just an example) could do more to highlight what the valuation report actually does and indeed does not. It should also be clear however that the general public should not all be thought of as stupid and they choose based on their wallet, not the title of the report. Neither lender calls a valuation a survey though!

    I like the idea of bringing policy assignments back by the way :o)

  • Margaret Fursey 14th June 2011 at 5:53 pm

    I definately thought it was a survey on the property, otherwise why would they use that to decide to lend me the money on it.

  • Dave Rolleston 14th June 2011 at 5:44 pm

    The reality in England & Wales is that the lenders hold all the aces. Insisting that they instruct there OWN survey at the clients expense. The price of which is significantly over inflated by the majority of the High Street lenders to line their own pockets.

    The process to upgrade to a more detailed report is cumbersome with most lenders as well and the applicants can wait literally weeks before a full report is released which might well show up areas of concern resulting in them backing out.

    The sooner the Scottish system is adopted the better. Far more transparent for any prospective buyer.

  • Andrew Carter 14th June 2011 at 5:10 pm

    Yes, as Chris says above, this has nothing to do with protecting customers, just generating revenue for the surveyors.

    While the FSA are at it maybe they could force all mortgage lenders to assign life policies and refuse to issue mortgage offers without them?

  • Andy Valvona 14th June 2011 at 5:10 pm

    In my experience, lenders could not be any clearer on this point. I can’t believe that any punter is not aware that they have got a copy of a valuation, not an actual survey.

    Chris is spot on!

  • chris gardner 14th June 2011 at 5:03 pm

    An example of a professional body feathering its own nest. This is nothing more than a sales campaign for surveys.