This week I refer back to previous articles – one regarding CMC fraudsters and another on the current illogic that infects the mortgage world.
Intrinsically I have no gripe with CMCs, well, not much, and they do serve a purpose of sorts as there will always be consumers that prefer to leave such matters to others and accept the financial cost of doing so.
What enrages me is the ability of scurrilous firms to level unfounded complaints which, despite the tangle of invention and defamation, frequently find their way to the FOS, where the outcome becomes something of a lottery.
CMCs are fully aware that the FOS represents a no cost opportunity to hit the jackpot. The FOS dutifully ignores invention and outright lies and searches assiduously for some area of deficit or neglect, for some means by which the complaint might be upheld.
This is a view born not from ignorance but from the experience of viewing hundreds of adjudications and probing the mindset that informs the outcomes. The interaction of the FOS is as much part of the problem as the CMCs because, without its potential involvement, the gravy train would be derailed.
The FOS frequently ignores information that should lead t to reject a complaint, such as proof of a complainant or CMC lying or the automatic slinging of a succession of standard allegations.
In behaving this way the FOS is failing both the consumer and the industry. The consumer is led to believe that financial firms are fair game and that they might luck onto a bonanza, whereas the industry resents the FOS and its FSA derived rules which allows it such latitude.
One alarming aspect is the ability of totally inappropriate individuals to operate, officially or otherwise, a CMC.
Currently £950 is all it takes to start a CMC with no exam requirements, suitability checks or past experience requirement. The MOJ needs to filter out these and other rogues before they create further havoc.
On numerous occasions I’ve stated that mortgage underwriting has lost all connection with reality and have previously lambasted Abbey for idiocy. That’s not actually its name by the way, although you could be forgiven for thinking so.
Abbey’s latest consumer stupidity is its assessment of repayment vehicles for interest only loans. With Isas and unit trusts it uses the current value of the investment thereby ignoring any potential growth over the mortgage term.
This may indicate a total lack of faith in equity markets, something the Spanish could easily be excused for, or it might reflect a disconnect with reality where the concept of TCF has yet to filter through.
A further piece of absurdity is that such investments can only be utilised if arranged more than a year ago.
What foolishness is this? Would somebody at the Abbey like to explain to me why an investment arranged 13 months ago is suitable but one arranged 11 months ago is not?
The FSA asserts that it leaves commercial decisions to lenders – a view countered by the content of the MMR – however; the issue of treating customers fairly rears its head when absurdity stops borrowers from making sensible, informed borrowing decisions.
Alan Lakey is partner at Highclere Financial Services