Phil Whitehouse, head of The Mortgage Alliance (TMA) offers a steer on keeping away from trouble.
Firstly, the main reason for removing a broker from a panel will be a suspicion of doing something dishonest or making a serious error of judgement either because they haven’t done the right checks or because they have been caught out by a third party.
In the worst case scenario, it may only take one dodgy case for a lender to blacklist you. Many lenders won’t take the risk of continuing to take business from someone they believe has put through a fraudulent case – regardless of whether it has been put through intentionally or because the proper checks have not been done.
If a case is intentionally fraudulent then the person submitting it deserves to be blacklisted. The more unfortunate cases are when you have missed something or have been misled by a third party.
It is crucial therefore that you know the third parties that you’re using and how reputable they are. Do a thorough due diligence on any third party and don’t take anything on face value, particularly for introducers. In general it is shrewd to use a selection of third parties; for instance if a solicitor or conveyancer that you use exclusively turns out to be ‘a bad apple’ you could well be deemed guilty by association, even though you personally have done nothing wrong.
Make sure you are in the strongest position possible by being up to date on all the latest information, such as money laundering rules, compliance and lender updates. A good mortgage club or network will provide you with this information through email and leaflets, road shows or seminars so take advantage of them. Make sure you are aware of the checks that a lender and the FSA expect you to carry out and read the information you are sent as it will contain crucial updates that you need to be aware of.
It will add to your understanding and make your life easier if you get to know the lenders you deal with as well as possible. The more you can understand the conditions that they are operating under and what they need from you and your clients, the better position you will be in when it comes to meeting those requirements and the less likely you are to inadvertently put yourself in a situation where they no longer want to work with you. Similarly co-operate with lenders if they ask you questions and be open and upfront; the more you can do to develop a cooperative relationship the better it will be for you.
Also, take an active interest in the quality of your business – seek feedback from your lender contacts on how your business quality stands up; you will usually find them very willing to share information with you plus what you can do, if necessary, to improve the quality.
There are very serious implications of being blacklisted, often with hidden consequences.
If you are removed from a lender’s panel, you reduce the number of lenders that you can deal with diminishing your clients’ choice; if this means you can’t offer your clients the mortgage that they want then it may well drive them to a different broker who can offer a wider range.
If the offence is really serious, then other lenders may also remove you from their panels. The network or club you are a part of is also likely to carry out its own investigation and may exclude you as they will have to make a decision on whether they still want to work with you or whether it will tarnish their own reputation. If these things happen then you could effectively be put out of business.
Be aware of the implications of the various anti-Money Laundering and Financial Crime regulations. In some circumstances a broker would not be warned if they are under investigation as it could be considered that they have been tipped off. A tip off is an offence in itself so organisations cannot be as open as they may like to be and brokers could be struck off without warning and with rare chances of appeal.
There have been a number of examples of brokers being removed from lenders’ panels where they were careless or naïve. To avoid this:
• It’s your livelihood that’s at stake here, so have high standards that you put in place for every case, don’t cut corners even when you’re really busy, and it goes without saying that you need to be straight and honest in everything you do.
• Try to see every client where possible, as you’ve got more chance of seeing if anything’s going wrong when you meet face-to-face than purely by post or over the telephone.
• If something looks too good to be true it probably is so be suspicious. Follow your instincts so if something looks a bit dubious, always check it out.
• Make sure you’ve got detailed records that are up to date that you can refer back to if necessary.
