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Boulger warns lender tactics discourage shopping around


Lenders are discouraging customers from shopping around for the best deal by leaving harming footprints on a borrower’s credit record when they make a simple mortgage enquiry, according to John Charcol senior technical manager Ray Boulger.

Boulger says this approach flouts FSA rules because of the damage this approach can have on a person’s credit rating.

Boulger says: “Most high street lenders (Halifax is an honourable exception) try to inhibit shopping around by leaving a hard footprint even when a customer just asks for a decision in principle rather than making a full mortgage application. This blatantly contravenes FSA rules, with only a few footprints needed to crucify a credit score.”

Boulger stresses mortgage brokers are a vital resource for customers in the current climate.

He says: “This is a time when, more than ever, a knowledge of the entire mortgage market is not only an enviable weapon, but absolutely critical to secure a competitive mortgage, and sometimes to secure any mortgage at all. In this environment a good, independent mortgage broker is worth their weight in gold.”

Boulger suggests turning to some of the less obvious lenders in the market – small building societies and private banks etc – which use manual underwriters, therefore avoiding the harmful computer model mainstream lenders use which is responsible for the unnecessary, harmful footprints on a customers credit history.

He says: “Despite six lenders dominating the market, niche building societies, alternative lenders and private banks – which are not just a home for the wealthy – are also active and this type of lender offers the added benefit of mostly using manual common sense underwriting by a human being. This allows cases to be judged on their merit, not on a generic computer model that is often unhelpful to borrowers, to say the least.”



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. Ray is right of course and this whole subject became heated around 2004/2005 and I (amongst others) created a lot of fuss about this with the FSA. After a considerable delay the FSA/CML and credit references agencies seemed to come to an agreement that the soft footprint should be used at the time of a credit check and seeking in principle if a borrower could borrow from that lender. The hard footprint was to be done when an application was received.
    Of course those were the days when there was a large intermediary market and we had a greater market share of an expanding market – were it not for the intermediary market trying to ‘keep the lenders honest’ for the benefit of the consumer then it would never have happened.
    Apart from Halifax, nobody really endorsed the idea with any great enthusiasm -Halifax were doing it anyway, as was BM and BOS at the time and the lenders paid lip service to it and slid back to their normal practice.
    We may as intermediaries not be as powerful as we were, but I agree we must make a noise about this issue and ensure the FSA protect the interest of the consumer and revisit this issue and take positive action to ensure that the lenders not only ‘treat clients fairly’ by only doing soft footprints up to the application stage, but make it absolutely clear, and seek permission from the potential borrowers before a hard footprint is done

  2. No, no, Ray, you’ve got it all wrong. Haven’t you heard? The real problems which we’ve identified lie all in the intermediary sector. They’re the people who give duff advice, overcharge for it and fail all the time to treat their customers fairly. All they sell are the products that make them the most money.

    That’s why the FSA has to be a responsible regulator and screw these miscreants to the ground, all in the name of cost-effective and accountable “consumer protection” and “better outcomes”. That’s our charter, right?

    So just lay off these poor downtrodden and oppressed lenders, okay? They do a sterling job and always offer their customers the best possible combination of choice, value and top quality service.

    The FSA sincerely hopes that it won’t be necessary to publish another rebuke of this type.

  3. michael white CEO Emailmortgages. 13th August 2010 at 4:48 pm

    Lending is a balance of risk vs. reward. There is no such thing as risk free, yet in a market where lending margins are at historical highs there is the real opportunity for lenders, or is there?

    Quite simply the current appetite for loans is being very fully satiated with comparatively huge margins on simple product design. So simple indeed one might say that the only consiistent rule being applied by lenders at present is the requirement to be ‘Squeaky Clean’!

    Instead, I agree fully, we do need the return of specialist lending on a much wider scale to assist those who are being unfairly declined. Lending decisions can still be tight but the margin that presently exists provides an opportunity to design products which are risk priced and properly underwritten on a “common sense basis” Unfortunately, I cannot see this happening anytime soon.

  4. This is a ridiculus state of affairs, anyone caught at this should be named, shamed and fined. The bigger the company, the bigger the fine to make it hurt.

    They should also be banned from doing new business for a peroid of time, this would make them think. It is tantamount to being a confidence trickster.

    What is the point of having a regulatory authority if con tricks like this are going on. Sort em out and make it hurt. It is the old consumer that is not getting value for money.

    Jack Morris

  5. If the gist of what Mr Boulger is saying about hard footprints being done rather than soft
    it wouldn’t take the FSA long to verify it.
    This old chesnut should have been sorted
    a long time ago.
    Come on FSA ….should us what you can do ?!
    Sort this out.

  6. To: Jack Morris

    There is no point in having a regulatory authority such as the FSA (unless, of course, you happen to work for the FSA). It couldn’t regulate a pee-up in a brewery until five years after the event and then it’d let all the real culprits off the hook, with “special training” given to FOS adjudicators as to how to handle complaints referred to them against the larger financial institutions, whilst the little guys get swiftly stomped on and squashed like tiresome and inconsequential insects. And then they wheel out Margaret Cole to reassure the world of just what a grand institution the FSA is, despite its detractors ~ it’s a tough and dirty job, but somebody has to do it. Hey ~ that’s why we’re all paid so much!

  7. At every turn it becomes increasingly obvious that saving the banks was a hugely expensive mistake.

    The fallout from Gordon the moron’s incompetence will be with us for generations.

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