View more on these topics

Stack holder

As the busy house-hunting season begins, those in the mortgage market

expect a hectic time. But this year, lending growth has at record levels.

Mortgage business is booming and should provide great opportunities for

lenders and introducers.

So why does this season bring groans from the IFA community who view this

as not much money for too much hassle? Especially when it should be seen as

a lucrative door-opener.

Indeed, many IFAs have decided against re-registering with the Mortgage

Code Compliance Board, deciding to concentrate solely on selling investment

products. Many have found that the poor service they receive from lenders

has made mortgages an impossible product to make honest business from.

Selling mortgages is not an easy process. First, as if the sale itself on

the customer&#39s premises was not hard enough, just look at what has to

follow – initial quotes, lenders to be selected, application docu- ments to

be completed, references to chase, valuations to organise, documents to be

presented to the chosen lender, offers to be chased, solicitors to be

selected and completion to be chased from all parties.

All this before an IFA can even think about chasing the lender for fees.

When things do go wrong, it extends this lengthy process and often the

lender is to blame. What is going wrong and why is this happening?

Many of the lenders&#39 inefficiencies appear to be caused by severe lack of

resources, which means they fall behind with processing. One recent story

involved a lender being four days behind in opening its post. Another

lender refused to talk directly to IFAs, offering them only an answerphone

message saying they will not be able to get back to them for at least 48

hours. All this results in mortgage applications stacking up. One IFA tells

of how a straightforward mortgage application took six months to complete.

Imagine the frustration for the IFA and customer.

Stacking up produces a dichotomy for IFAs. Their role is to scour the

market for the best rate but the lenders offering the best rates are often

the ones most likely to stack up.

So should the IFA recommend a less financially attractive product to

provide a quicker and less stressful experience for the consumer?

Lenders&#39 inability to provide adequate resources at this busy time is

clearly not good for the IFA or the customer.

But it is not just a lack of resources that is to blame for lenders&#39 poor

service. A common grievance is when, after the initial introduction,

lenders go direct to the customer to catch up on their backlogs.

This makes it confusing for the customer who suddenly has another party to

deal with. Typically, the lender will ask customers for information that

has already been given to the IFA at the fact-find.

This frustrates the consumer and makes the IFA look inefficient. If this

situation escalates to the point of role rev-ersal – where the customer is

updating the IFA – the IFA gets quite rightly annoyed. Although rare, it

has been known for a lender to try to sell other products direct to the

client.

Other lenders make the process more protracted by making admin errors.

One example is of a mortgage offer that took five attempts to get right.

First, the lender quoted the wrong interest rate, second, the name was

wrong, third, the length of term was wrong and finally the wrong repayment

method was shown before getting it right on the fifth attempt. In another

instance, a lender&#39s mortgage documentation offered a £1.50 cashback

when it should have read £1,500.00. Overlooked by the solicitor, this

error was not noticed until completion date and caused mayhem in the chain.

Such errors are commonplace and are caused by a combination of outdated

and disparate IT systems, heavily paper-based processing and human error.

However, the most common gripe is when lenders fail to keep IFAs updated,

simply by failing to return their phone calls. Lenders clearly cannot

afford such inefficiencies going forward , especially when the onset of

mortgage regulation will make them responsible for introducers in the

advice and service that they provide. They need to find more efficient ways

of servicing IFAs and reducing their own costs of administering

applications.

One of the options available to lenders is to outsource administration to

third-party specialists. A new breed of outsourcing service company is

emerging – business services providers. These processing specialists can

provide an entire mortgage processing and admin operation as well as

providing mortgage packaging services to help make selling mortgages easier

for the IFA community.

BSPs also offer many more added-value resources, such as mortgage

consultancy, business implementation services and leading-edge technology.

They offer solutions that are flexible enough to manage the peaks and

troughs, the regulatory environment and the demands of the market.

At present, lenders make the mortgage process too protracted. IFAs end up

doing too much admin and chasing instead of selling. Lenders should be

considering options such as outsourcing, not only to support IFAs market

but also to save money wasted through poor admin.

Recommended

Caroline Anstee

Some IFAs feel that making contact with lawyers and accountants is a wasteof time because they gain very little business for the effort it takes.From my experience, nothing could be further from the truth. A structuredapproach can lead to long-term relationships which benefit all parties. Ask yourself who are you going to target? Small and […]

Julian Gibbs

Over the next five years, most analysts expect commercial property to showgross returns in excess of 10 per cent a year. This is made up of yields ofaround 7 per cent plus rental growth of 3 to 4 per centa year. This shouldequate to a return of around 7.5 per cent a year net of […]

Public face postcode lottery on protection

Group critical-illness and inc-ome protection policyholders face apostcode lottery on the cost of premiums, according to research from theOffice for National Statistics charting disease patterns in various regionsof the UK. The ONS figures reveal higher levels of heart disease in South Wales,Scotland, Tyneside and Northern Ireland which could lead to higher premiumsfor group schemes based […]

Public saving for a recession

Britons are preparing for a financial storm by saving 32 per cent of theirdisposable income, according to findings from Alliance & Leicester&#39s newwealth tracker index. A&L asked a sample of 2,000 to detail their level of disposable income andhow much of this is saved, spent or invested to reveal the average Britonaims to save £93 […]

Responsibility Matters

The latest update from the Sustainable Investments Team at Royal London Asset Management, Responsibility Matters, is now available. In this edition the team look at issues such as the growing acceptance of sustainable investing and technology in China. Read the update here: The value of investments and the income from them is not guaranteed and […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment