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FOS hits out at lenders over underwriting ‘box-ticking’


The Financial Ombudsman Service has hit out at lenders’ “box-ticking” approach to underwriting and has urged them to stop hiding behind the Mortgage Market Review when making lending decisions.

It says that since April 2014, when the MMR came into force, it has received complaints that lenders have applied the new rules too rigidly and that this has led to “outcomes that are unfair on customers” in some cases.

In its latest newsletter, the FOS says it has received a significant number of complaints about porting, in particular. In many of these cases the borrower claims to have been told they could port their loan but now cannot as a result of tighter new lending requirements.

The FOS says: “While a business’s lending criteria isn’t something we can change, we know from cases we see that inflexible processes and ‘box-ticking’ don’t always lead to a fair outcome for the customer involved.

“So we’ve been clear that, while a business’s overall lending criteria is a matter for them, the new rules don’t mean that lenders shouldn’t consider the customers’ individual circumstances when making decisions about lending.”

The FOS has also published its first quarter complaints data for the period April to June.

Once again payment protection insurance was the most complained about product in Q1, making up 55 per cent of the 89,935 complaints received. The FOS upheld 74 per cent of these.

Current accounts were the second most complained about product and mortgages were third. There were 3,338 complaints about mortgages – 4 per cent of the total number of complaints – of which 32 per cent were upheld.

The number of complaints about mortgages fell 2.4 per cent year-on-year, however.

Between April 2013 and March 2014 there were 12,598 complaints about mortgages, of which 29 per cent were upheld. A year later this had fallen to 12,286, of which 33 per cent were upheld.



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There are 9 comments at the moment, we would love to hear your opinion too.

  1. What is probably not recorded is where the lenders have refused to lend for new applicants on the basis of age discrimination. At present I have a very little respect for lenders at present who cannot apply decent humanitarian principles when making decisions. Treat others as you would wish to be treated…..

  2. The intransigence of lenders and their refusal to honour the MMR details is a matter for the FCA.

    Better they clear thus Augean Stable than wasting time on superfluous software

  3. On mortgages the story has two components, good that the number of complaints has gone down but very concerning that the number of complaints upheld has actually increased!

  4. Damned if they do damned if they don’t.

  5. But who do you complain to when a new mortgage application is turned down?

  6. Issue is that running a mortgage into retirement was previously a big no no.

    Then it was OK with appropriate repayment method,(e.g pension provision).

    Post 2015, the recorded repayment method could simply be cashed in.

    Then two years later complain that mortgage is now unsupportable.

  7. What a stupid world and industry we live and work in !

    We don’t make the rules, we just have to live and interpret them as best we can, trying not to trip over are own feet along the way !

    FOS needs to ask the FCA in the first instance why there is so much box ticking, and at the end of the day I’m sure they (FOS) have no conception whatsoever, on how to run a profitable business they just rely on money they get for nothing and if they want more they just take more !

    I’m sure they (FCA, FSCS & FOS etc etc etc) must sit there and scratch their heads like monkeys thinking up extra pages to put in the rule book, more guidance, thematic reviews, more surveys, etc etc etc

  8. “stop hiding behind the Mortgage Market Review”

    Are they being serious? The MMR was a New Labour HM Treasury policy which was a knee jerk reaction to the banking crisis, this policy was handed down to the FSA for implementation, after a few tweaks here and there by David Geale and a couple of other members of staff.

    The lenders now have to deal with two regulators and an Ombudsman service that is inconsistent and far too focussed on consumer outcomes, the FOS should have more input on policy if it thinks the rules are unfair.

    Regulation is failing society, we need balance, I see none.

  9. The FOS is merely doing the Government’s bidding in trying to encourage ever more debt.

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