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FCA hits out at lenders over ‘baffling’ mortgage porting stance

The FCA says lenders are being inflexible over allowing borrowers to port their mortgage following the introduction of the Mortgage Market Review.

Speaking to Money Marketing six months on from MMR implementation, FCA director of mortgages and consumer lending Linda Woodall says lenders are continuing to apply full affordability checks to borrowers who want to transfer their existing mortgage to another property.

Under the MMR, full affordability assessments are not required for such deals where no additional lending is required.

Woodall says: “We are seeing instances of difficulty when it comes to borrowers porting mortgages and we are not really sure why. It is baffling.

“It is for lenders to decide based on their criteria but there may be a degree of inflexibility.”

She adds: “At this stage we are merely observing but we could intervene if the practice becomes statistically significant.”

The regulator argues the new rules have resulted in just 15 minutes of additional work per case for brokers. Woodall says while some lenders installed complex processes following implementation of the MMR, “if you talk to mortgage brokers, it was taking them another 15 minutes per case because that is what they do”.

Woodall also says borrowers are no longer experiencing the lengthy delays in seeing a branch adviser that were widely reported in the immediate aftermath of the MMR. In some cases, borrowers were told they would have to wait up to five weeks to see a branch adviser.

But brokers say Woodall is overplaying the initial success of the reforms. Your Mortgage Decisions director Dominik Lipnicki says: “I disagree with the FCA on the point about application times but it is not just putting the cases through that is taking longer. It is harder to get cases completed now – the affordability calculators and how many knockbacks you have all add up to more time to place the deal. 

“Of course, it depends on each case but an average of 15 minutes extra is certainly not the case.”

Perception Finance managing director David Sheppard says: “If waiting times are down and banks are handling the increased volumes more easily, why are they looking to open up more to the broker channel and why is the Association of Mortgage Intermediaries forecasting that the direct-only channel is in a period of continued decline?

“Waiting times certainly do not appear to have curtailed from what we have seen.”

Linda Woodall on…

  • …porting: “We are seeing instances of difficulty when it comes to borrowers porting mortgages and we are not really sure why. It is baffling.”
  • …extra work for brokers: “There has been a range of responses, with some larger players putting in place more complex systems, but if you talk to brokers it was taking them another 15 minutes per case as that is what they do.”
  • …branch appointment delays: “Having got over the line with the MMR, there were some teething problems – people were finding delays in getting appointments and some of the conversations in-branch seemed beyond what the MMR was calling for… The logistical side is much better so people can get to see an adviser quickly now.”


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There are 18 comments at the moment, we would love to hear your opinion too.

  1. If I never had to do another mortgage it would be way to soon. Having done this job for a long time I can safely say the ‘lunatics have taken over the asylum.’ The stress for both an adviser and the client in firstly trying to find a lender willing to do what they’re supposed to do, lend, then trying to get a case to completion with stuff being requested weeks into the process, when all of it could have been requested at the outset is not worth the aggravation. Clients don’t understand what is going on since MMR and they come to us bemused at lenders attitude’s to their particular problem. Even the FCA say they’re baffled. Where does that leave the rest of us?

  2. Poor Linda. All confused. Might the checks just be that the new lender might not want the business from a bad credit risk? It’s like insurers who will only renew car insurance on the bad risks on expensive terms because they don’t really want the business.

    I know that in the fluffy world that Comrade Woodall lives in, that we are all equal and should be treated thus, but in what remains of the real world, some people shouldn’t really be lent to, despite them having been lent to in the past. It is a good business decision to leave the bad stuff with another company. Has the good Comrade not understood the sub-prime crisis and the subsequent subdivision of Northern Rock into a good and a bad bank?

  3. Rather than just observe the FCA should make it very clear that affordability assessments are not required where there is no additional lending and will not be tolerated. They should take action now and not wait to see if the practice becomes ‘statistically significant’. Borrowers are paying un-necessary fees to lenders who are to all intents and purposes using the regulations as an excuse for profiteering.

  4. “It is for lenders to decide based on their criteria but there may be a degree of inflexibility.”

    Well, it’s either the lenders decision or it isn’t. And if there is a line where the degree of flexibility becomes unacceptable wouldn’t it be better to say so now rather than wait until there’s a problem? Based on this article it seems to be a case of wait until there’s a bigger probelm and then decide where the line is.

    The FCA recently asked for examples of where it may have applied hindsight to regulation. Here’s one in the making so please take note.

  5. @ Ancient Britain. Can’t help wondering if you’ve hit the nail in your last point…..mmmmmm tasty £10k penalty coming our way…….and we can ditch that 0.5% over base for life rate we agreed to years ago…….

    I’m probably just being too cynical…..although to be fair I suppose it could just be some lenders (despite the translisional proviso’s granted), are just too scared of the goalposts being marched off the pitch at some later date…..

  6. MMR another pointless unnecessary piece of regulation designed to deal with a NON problem.

    As a result we now have previously unheard of issues such as Interest Only/age/term Mortgage prisoners, Profiteering on a grand scale and surprise surprise the lowest purchase approval figures for 14 months !

    Baffling – well it not as if you were not warned is it ?

  7. Like Jinker I haven’t sold a mortgage in 20 years (last one was my own) so really don’t care from a personal view point however it seems to be exactly the same as every other piece of financial regulation which is invented and implemented. A waste of time – with possibly one exception. TCF. The FCA is so full of s*it. Heir Wheatley stated they are a totally different animal to FSA and would be able ago act quickly when consumers were not getting good outcomes. If this isn’t case of bad consumer outcomes I am not sure what is, considering a mortgage is most peoples biggest ever financial commitment. Ms Woodall you really need to buck your ideas up, extract a digit and actually do something instead of just pontificating and blowing hot air. Don’t wait for tens of thousands of people to have start shouting from the roof tops.

  8. Chipping – nail on the head first time. The lenders are offloading these “liabilities” as fast as they can and quoting MMR or FCA agreed lending terms as justification.
    Just had a case declined due to failure to disclose a liability – £107 Credit card balance which ad been paid in full 5 days before application but still showed as outstanding on experian. Client wanted to borrow £240k on £495K purchase !!!!!!!!!!!

  9. @DB – so it’s the clients fault that the lenders research tools aren’t up to date. Can only say I understand your frustration – appropriate words (repeateable in a public forum at least) escape me!!!

  10. Chipping – nail on the head first time. The lenders are offloading these “liabilities” as fast as they can and quoting MMR or FCA agreed lending terms as justification.
    Just had a case declined due to failure to disclose a liability – £107 Credit card balance which ad been paid in full 5 days before application but still showed as outstanding on experian. Client wanted to borrow £240k on £495K purchase !!!!!!!!!!!

  11. Today – client wished to retain base + 0.49% lifetime tracker + further advance Base + 0.99% – failed affordability as whole of loan stress tested at 6.99%. Client would need to add wife to loan via Transfer Subject to Mortgage and pay stamp duty of up to £7500 + legal costs to retain the preferable rate he currently enjoys. Annoying that I forego “commission” by not recommending a remortgage as it would not be best advice and the lender shafts the client by wriggling out of continuing a lifetime tracker at advantageous rates to the client.

    Linda – If something baffles – look for potential motivations.

    It’s cynical and wholly worthy of Bankers whose sole motivation is profitable lending above prudent assessment.

    Biggest loss to client I’ve recorded is £1m at base +0.49% with remaining term of 19 years @ 50% LTV where client has been an impeccable borrower who wished to move for health reasons – no additional borrowing – just a straight port. Failed affordability as stress tested @ 6.99%

  12. @DB – isn’t that ludicrous – so stay in your existing home Mr Borrower – depsite the fact that it’s no longer suitable becuase of your health – because we’re concerned that you won’t be able to afford the mortgage you’ve already got with us (and will still be liable to maintain) if the rates rise substantially. whereas of course by declining your request, we’ve ensured that of course if those rates rise to those sorts of level, you will of course be able to afford the very same amount on the very same terms, in your current (unsuitable) property………

    Can’t help wondering, given that FCA requires firms to treat customers fairly, and has the transitional permissions available for firms to waive requirements that would apply to new borrowers, whether there’s grounds for complaint, more particularly (depending on the health issues) should elements of disability discrimination have any bearing. Not sure on that one…….might be worth checking with the FOS technical….

    Could have come straight out of a “Yes Prime Minister” show!!!! Sounds the sort of case that would make great TV for other types of TV (consumer related) shows…..

  13. @DB

    Me Too !!

    I have had so many examples of this I have forgotten – it’s beyond belief – the point is Linda and the gang WERE WARNED about this as well as the ‘consumer outcomes’ resulting from the MMR regulatory interference causing mortgage prisoners interest only/age/mortgage term.

    Profiteering on the back of MMR is rife (particularly interest only customers) and previously perfect borrowers effectively becoming either high risk of default or imprisoned with no prospect of release.

    If this isn’t the perfect example of pointless regulation of a non existent problem creating ‘unforeseen’ (only by the regulator) consumer outcomes I don’t know what is !

  14. Here’s a really great one – Halifax shut down TMB – went to port a TMB Deal and couldn’t as TMB did not have facility for client to APPLY to port the loan. Complained – went to Ombudsman (FSA ) who upheld that it was OK for Halifax to renege on porting terms by removing facility to APPLY as they had agreed their closure with FSA – I reckon that cost client £10,000’s in additional interest charges. Really cute way of ditching lifetime tracker book ! TCF more WTF.

    Interest only – client property value of £1m debt £350k – if they repay debt it will probably create/increase IHT liability by £140k. Is it good advice to recommend Repayment loan ?

    First Time Buyer: completes with Carloan/Student Loan/ Creditcards etc at rates higher then Mortgage – is it good advice to recommend repayment until higher rated loans are repaid ?

    The list goes on ……..

  15. TMB have just upset one of my clients. Client in arrears spoke with TMB 8/10/14 to advise them he was to pay £7k off those arrears by 28/10/14. A member of TMB staff said that will be fine your account is on hold. A new arrangement can be set up after 28/10/14.

    Three days later TMB issue court proceedings.

    Looks like he will be in a more difficult position now and we are looking at ways of raising funds to repay all the arrears.

    TCF Is this fair or just TMB looking to get all arrears repaid in one go.

  16. I find all these stories inordinately frustrating. In the 80’s and 90’s as a B/S manager I railed against the fashionable demutualistion fad of the time, and that mutuality, for all it’s imperfections and when properly implemented at least ried to treat folk decenlty.

    I recall the chariman of the Society I worked for at the time would hit the roof if you referred to somone as a customer…….”Customer – we don’t have customers lad – we have members – and if you don’t understand the difference you shouldn’t be working here!”.

  17. In the 90’s we were too expensive and credit scoring was the holy grail and we were “doomsayers” for predicting that it would all end in tears.

    When the city via share price dictates policy you end up with what borrowers – both personal and small commercial – have to contend with.

    Having said that the remaining mutual organisations haven’t covered themselves in glory or stepped up to provide a decent member service.

  18. To be absolutely honest, I’m baffled that she’s baffled

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