Risks From Unscrupulous Mortgage Introducers.

Risks From Unscrupulous Mortgage Introducers.

With lenders sometimes seeming to strike brokers from their panels for very little reason and no effective means of appeal for the unfortunate advisers it’s getting more and more important to check out any new introducers in as much depth as you can.

This was brought graphically to my notice when Which Network had a call from a broker (let’s call him Bob) who I had known for years.  The gentleman in question was honest and thorough and until that moment had never had any problems at all over the 8 years his wife (let’s call her Sharon) and Bob had been independent mortgage advisers.  The first they had known of the problem was when they received the ubiquitous letter from a lender, telling them they had been removed from their panel due to the “poor quality of their work”, usually a euphemism for fraudulent or at least inappropriate mortgage applications, or scheme manipulation.   This was followed by a second letter very much in the same vein from a second lender which in turn led to the broker being terminated by his network.

I’m sure everyone in the business appreciates the seriousness of this situation as in many cases it could effectively mean the end of a career.  In this particular case the business was able to carry on in the Sharon’s name as an RI of another local IFA who had worked with the pair before, knew that they were squeaky clean and they were Directly Authorised so able to take the perceived risk of accepting them.

The problem was traced back to a new introducer (let’s call them Dodgy Mortgages Ltd) who had themselves been introduced to the business by a long-term introducer and personal friend.  This new introducer was a mortgage brokerage, who said they would be passing excess leads on to Bob when they had more work than they could handle.   This sounded plausible but the reality was that they were cherry picking the best leads for themselves and passing the more complex and higher risk leads on to Bob.  An ideal business partnership for Dodgy Mortgages Ltd since not only was someone spending precious time chasing mortgages that probably wouldn’t come to anything and giving them a slice of the fees etc if they did get passed the finish line, but also they were arm’s length from any compliance risk.

The moral of this story is “check your sources”, unless the introducer is literally your mother or your father, have a good look at the quality of the business they are giving you.  Look at the ratio of mortgages which go through to completion.  Check how many mortgages aren’t taken up, how many fall over at the last hurdle and how many of these fail because of inaccurate or unverifiable information given by the client.  If this is more than one or two with regard to the latter points, then you really need to think it through and decide whether to sever the relationship or not.  Turning down work is never easy especially in these hard times, but you really have to weigh this against the possibility of losing your entire income stream?