View more on these topics

A blow for the good

I was asked my views by a journalist regarding whether practitioners should blow the whistle when they become aware of individuals who are not behaving appropriately.

A keystone of the FSA approach has been the treating customers fairly principles. Much progress has been made on that front but industrywide reviews show there is still much to be done. Weaknesses have been found both in intermediary and lender operations and the recent Which? report paints a potentially bleak picture of the standards being met by advisers. It has been underlined that the sample used was tiny but perhaps we should all look at the findings and try to identify how advisers were found to have failed at the most basic level.

Perhaps we are seeing an effect of the reducing average age of advisers, perhaps we can learn something about the need for better understanding of the sales process or perhaps we should remember the need to invest in training even when reduced business volumes and increasing costs are placing pressure on businesses.

Ultimately, our businesses are not about the amount of money advanced, the average size of loan or the value of procuration fees. Without the trust and loyalty of our customers and without confidence in the housebuying process, customers will move away and look for alternative ways of satisfying their need for the security of owning their own home.

Assuming that those of us in the mortgage industry support the concept of making home-ownership available to the greatest possible number, one can only presume that the greater of us also have the desire to identify those who for whatever reason fail to meet the most basic standards set by regulation. It is in all our interests to do whatever we can to get these individuals’ activities curtailed. We should not hesitate in passing information to the FSA, which has recently repeated its request for firms to come forward with help of this nature.

I am being careful here not to be exclusive. There is plenty of evidence that lenders also need to look closely at their activities. Affordability should be checked by the intermediary but lenders also have a responsibility to ensure their own control measures are sufficient to identify where information provided merits further examination.

Many of those borrowers now finding their commitments unmanageable might have been identified as high risk if more careful checking had been carried out. Similar comments could apply where experience shows that properties were valued at inflated levels. Fraudulent applications cannot be defended and the perpetrators should be exposed but lenders must ensure that they take every possible action to minimise their risks.

Much headline news in recent times has focused for very good reasons on the impact on borrowers. Much has been made of those who are in financial distress and in danger of losing their homes. Sadly, the financial costs are also being met by two other groups. There are many borrowers who have acted very prudently and have not contributed to the problems created by those who have not done so. Similarly, a great many shareholders have seen the value of their investments reduced by the capital losses incurred by firms. We should also not forget the impact on pension funds.

Richard Fox is chief executive of the Society of Mortgage Professionals


Towry Law wins the lottery

Towry Law has been appointed by Camelot to offer financial planning advice to National Lottery winners. It joins a panel of professional firms which offer advice to winners of more than £250,000.

Incoming B&B chief will review GMAC loan deal

Newly appointed Bradford & Bingley chief executive Richard Pym has the task of stabilising the lender as it tries to regain ground in the wake of the credit crunch.Pym, who retired as Alliance & Leicester group chief executive in July 2007, says he will pay special attention to B&B’s deal with GMAC for its books […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm