In its latest newsletter, the Ombudsman chides certain lenders for their inflexibility in dealing with a number of borrower-types post-MMR, especially in the case of porting mortgages which should have been covered by the regulator’s transitional arrangements, but are effectively being put through the full affordability wringer. It also laments the ‘tick-box mentality’ that some lenders have adopted which gold plates the rules to the nth degree and stops borrowers securing finance they would ordinarily be able to afford and maintain.
One might have hoped this ultra-conservative, ultra-rigid lending had been jettisoned by most lenders in favour of treating every case on its merits but this would appear not to be the case. Many lenders freely admit that immediately post-MMR they over-egged the compliance pudding but have loosened up since then, however, not all lenders are in the same space.
To my mind, this is a much-needed regulatory shot across the bows for lenders which appear to have interpreted the rules along the lines of ‘automate everything’, ‘all borrowers are the same’ and ‘nothing shall pass’. Effectively this is the regulator calling on lenders to treat borrowers as real people and to ensure each case is looked at individually. This means looking at all the figures and the circumstances in the round, rather than rigidly sticking to a ‘catch-all’ approach which ultimately helps no-one.
We choose to operate in this way but I fully recognise that, in order to do this, you need competent, experienced people and you also need systems and processes which have built-in flexibility that allow underwriting on this level. Putting all your lending faith in a computer system or having incredibly stiff criteria is not going to result in the borrower outcomes that anyone wants. Least of all, it would seem, the regulator.
The lending community has been warned.
