The Association of Mortgage Intermediaries wants to see the introduction of an expert panel to help with mortgage complaint decisions that will be referred to the Financial Ombudsman Service.
The FOS will have the responsibility for mortgage complaints from October 31 and the AMI's suggestion is for a panel to offer expert opinion and give the FOS the benefit of this expertise when reviewing a complaint.
AMI director Chris Cummings told a panel discussion at the Money Marketing Live conference in Manchester last week that the AMI is discussing what constitutes good customer practice.
He is keen to point out that mortgage intermediaries are predominantly “low risk” and should not be considered in the same arena as other intermediaries and believes it is important that personal indemnity insurers do not misunderstand the status of mortgage intermediaries after M-Day.
Cummings said: “We are spending time with the PI community, saying premiums do not need to increase with regulation as we are low risk.”
Key Retirement Solutions business development manager Dean Mirfin believes a panel would be welcomed. He says: “We found that our FSCS levy had increased by £13,000 this year. When we found out it could not be paid in instalments, we just had to come up with the money. The industry does not need a similar issue with PI payments, considering our low-risk status.”
Prudential national mortgage manager John Malone says the idea has his full support. He says a benchmark is needed for the ombudsman service, the lender, the intermediaries and the consumer. He says: “It is important to know there is help available in the form of a panel.”
Malone believes the panel should be made up of leaders across all areas of the mortgage market, from experts in sub-prime and first-time buyers to the non-regulated area of buy to let. He says it is important that experts from across the UK should be involved in the panel, including someone with experience in the unique mortgage market in Northern Ireland.
But there are reservations with the scheme as there could be a conflict of interest from the FOS. Mortgage Code Compliance Board compliance director Richard Fox thinks that a balance needs to be found.
He says: “The FSA as well as the FOS need as much input from the industry as possible but we must be sure there will be balance between the two and not a conflict of interest between the trade and consumer sides.”
Whatever the reservations of the industry, it is going to be a learning curve for the FOS, just as it was for the Mortgage Arbitration Scheme. Mortgageforce managing director Rob Clifford says it may be a six to 18-month period of learning for the FOS.
Another role for the panel is to help the FOS differentiate between the honest consumer and the “professional complainer”.
Clifford suggests there should be a barrier for entry for the complainant. Lessons can be learned from other consumer bodies. The Association of British Travel Agencies, for example makes a small charge for each complaint. There are no plans yet to introduce this with the FOS.
The FSA says only 46 complaints have been upheld against mortgage brokers in the last 12 months.
Cummings says: “My concern is that people are being taught to complain and so the number of complaints is bound to increase.”
The FOS however is not expecting more than a 5-10 per cent increase in complaints after M-Day. FOS spokeswoman Alison Hoyland says: “Up to March 31, 2004, we have seen 3,220 mortgage-related complaints. We expect around 600 a year.”
The type of complaints that the FOS expects to get are maladministration complaints, delays in setting up a mortgage, rate hikes and misunderstanding of calculations.
The Council of Mortgage Lenders' figures show there are around 10 million mortgage holders in the UK and less than 0.5 per cent complain. Fox says the MCCB received fewer than 100 cases last year and less than half of these were found against the firm.
He says: “There is very little evidence of any scandal in the mortgage market. It will be interesting to see if statutory regulation produces a raft of unhappy customers but I do not think there is evidence of a huge number of totally dissatisfied customers.”
The MCCB says of the firms with whom a complaint had been made, about 60 per cent of them fell down on record-keeping. But with mortgage regulation, record-keeping should be part of a mortgage intermediary's life.
Oakwood IFA principal Rob Marr says: “We would welcome a panel of experts. The world is becoming accustomed to a compensation culture. It would be good to know that here is someone on the side of the advisers and even the lenders.”
Mortgage Intelligence managing director Sally Laker says: “Unfortunately, there are professional complainers out there. To have a panel of people with mortgage experience to help ensure best advice and transparency is being upheld for the consumer is a very good idea.”