I was hoping that 2014 would prove a better year for those who, like me, consider balance and rationality to be essential rather than occasional components of everyday financial life.
My optimism was shattered pretty quickly by Lloyds Bank which refused my son a student account despite him banking with them and despite him being a student.
It transpires that their requirements now extend to his parents also banking with them. My wife has several Lloyds Group accounts with the Halifax but, somewhat predictably, these don’t count.
Then in a recent letter Cofunds elected to raise the idiot bar an additional notch.
Having been advised of a client’s new address they responded with a request for the previous address. You know, the one where the client was living last year when the funds were invested. You know, the one currently shown on their website!
Franklin Templeton then piled in with a tortuous correspondence. My client (and their customer) wanted to encash £40,000 and wrote to them confirming this.
This resulted in her receiving an encashment form with three designated spaces for the four funds she wanted to encash. I returned the signed form with a letter setting out her exact requirements which then prompted a request for proof of identity and address.
Regardless of whether these companies actually need these items or are being overly pedantic, the administrative burden caused by this adds massively to the time spent and, as we all know, time equals money.
We have seen the removal of self-certified mortgages and non-status loans and the MMR will place an even greater onus on lenders to ensure affordability which is why I recently raised an eyebrow when purchasing a car at an Audi dealer.
I chose to take finance through Audi’s own company and set about completing the loan form. Once completed I realised there was something missing – at no point did it ask for income details.
Apparently financial profiling is being used and it begs an important question, if a mortgage lender is able to register a charge on a tangible asset such as a detached house (as opposed to an unsecured loan on a depreciating asset) then why cannot lenders extend flexibility to those borrowers whose profile suggests that they can repay a mortgage?
Logic suggests that this would speed up administration and enable loans to borrowers who currently fail to fit the narrow lending parameters.
Of course, as I point out to every client, logic and the financial services industry are strangers that meet occasionally and then only by chance.
Whilst on the subject of mortgages I recently received a sad and dispiriting reminder of why the MMR will impose unintended and negative consequences on consumers.
Some years back C&G provided an elderly lady with an interest-only mortgage with her son as guarantor this loan currently being 40 per cent of the property value. The loan is now due to be repaid and the lady, age 97 and suffering from Alzheimer’s, is being given a week to repay the loan or suffer legal consequences.
Her son has power of attorney but C&G will only deal with his mother. The son is financially able to act as guarantor but the new rules mean that the loan has to be terminated.
And this from a lender funded by the UK taxpayer.
Alan Lakey is partner at Highclere Financial Services