Collegiate News

Importance of being earnest on loan criteria

8 June 2006


Money marketing-08-Mar-2007

Martin Archer, Claims Director, Collegiate

I trust that your mortgage broking readers were not unduly flattered by the comments of Accord Mortgages managing director Linda Will that brokers are better suited to helping their clients than lenders when they are faced with repossession (Money Marketing, February 22).

One can well understand why lenders are keen to put the broker back into the equation to assist in a remortgage or debt consolidation away from them, thus saving them from the consequence of their optimistic lending decision.

Failing that, as she points out, "there is also the issue that the broker assessed the initial affordability, so it could be a TCF point for the broker to then help their customer who is in trouble". In other words, the broker can carry the can for the boldness of the provider's lending policy.


I do not suggest that this is a particularly unreasonable stance for lenders to take, given the regulatory and ombudsman regime that mortgage brokers are now subject to. However, it highlights the reality that should repossessions go through the roof, those brokers who have not positively advised against irresponsible borrowing, as opposed to merely warning clients about the risk, run the risk of finding their professional indemnity premiums also going through the roof, as PI insurers start to appreciate the regulatory reality of where culpability will be perceived to lie.


IFAs have often carried the can for the mistakes of providers in their product design and mortgage brokers should be under no illusion that they too will carry the can for mortgage lenders' reckless lending criteria.

Given there is no consensus as to what is and what is not an affordable mortgage commitment, one should not be very surprised if, with the easy wisdom of hindsight, the Financial Ombudsman Service concludes that the bar ought to have been set very much lower than some of the current aggressive lending criteria offered in the market.

Also, one should not be surprised in this consumerist age if the FOS pays short shrift to any broker who hopes to rely on a few standard paragraphs highlighting the risks but who fails to actually advise their clients against running them.




 

 

Watchdog row with PI firms

15 March 2007


Money Marketing -15-Mar-2007

The Financial Ombudsman Service has accused PI insurers of blocking IFAs improving complaint-handling standards by using delaying tactics and overly legalistic procedures.

Speaking last week on Money Marketing TV, FOS principal ombudsman Tony Boorman said: "PI insurers can get in the way of good complaint handling by delaying matters and adopting a rather unnecessarily legalistic approach.".

Boorman refuted claims of a lack of consistency in the FOS's decision-making processes.


He said it was an easy allegation to make due to the different cases it deals with but admitted it could do more to raise adviser confidence by publishing more details on the reasoning behind decisions.


PI firms have hit back, with Collegiate managing director Tony Howe saying Boorman's comments are hypocritical and claiming the FOS is responsible for most delays. Howe says insurers have legal liability so must take a strong legalistic approach.


He says: "This is a huge case of the pot calling the kettle black. Most of the delays we see are caused by the FOS rather than PI insurers, due to its heavy workload. We have to work to time limits while the FOS does not and it seems to take forever with certain cases."