Intermediaries Relationship With Lendersgary
Hands up everyone who thinks that all banks and building societies have wrongly been portrayed in the popular media, are actually just massively misunderstood and are really not for profit institutions whose only aims are to help the public save money and provide a valuable income stream for mortgage brokers and IFA’s. Nobody, well I think you’re all just a hard-hearted cynical lot.
The reason I say this is because I’ve just been reading some lenders comments both from a recent round table event in London and prior to this, and apparently some are worried about their relationship with intermediaries in the current lending environment. Personally I don’t blame them seeing as how us intermediaries are such a feckless, thoroughly useless lot who just over ten years ago gambled away billions of pounds on risky investments and then needed bailing out by the government…… Hang on though, on reflection, I don’t actually think that was the intermediaries?
Seriously though I must admit, I do have some sympathy with the banks since on the one hand the government often have a go at them to lend more money, while at the same time the Bank of England is warning them not to lend to anyone who hasn’t got capital to cover the loan 3 times over and doesn’t really need the money in the first place. It must certainly seem like being between a rock and a hard place at times.
What does worry me at the minute though is some of the rhetoric surrounding this issue. Having attended a FSA briefing a while back, it was made crystal clear that one of the main responsibility for borrowers meeting lending criteria such as affordability falls squarely on the shoulders of the lenders. Since they have access to millions of pounds worth of systems, credit checking facilities and have the ability both to share and cross reference information, this seems to be both logical and fair.
I’m not saying that intermediaries shouldn’t do their utmost to check that their clients satisfy any criteria set out by the lender, but they are essentially introducers in this process not packagers and I do get slightly worried where a lender has to “consider their relationship with intermediaries in view of possible “not factual” compliance problems as this could so easily bring about the elbowing out of small independent brokers, replaced by financially lead, deals with the largest networks or DA brokerages, restricting the public’s access to some products and financially disadvantaging some people.
I don’t have any sympathy for deliberate mortgage fraud you understand, which I still maintain should result in a prison sentence every time the same as any other kind of deliberate financial fraud, and I do strongly believe that the industry needs to have its standards raised and be seen to have its standards raised. I just hope that existing and future legislation is used in the way the FCA intended it to be used and not subverted to funnel business via the most profitable conduit at the expense of the very public who the regulations were designed to help.