An online poll carried out Mortgage Solutions of 134 readers showed that 36% of respondents appeal lender’s decisions all of the time, while 45% do so a handful of times. Just 19% of brokers said they never needed to ask lenders to reconsider their decision.
Lenders were accused of being “typically vague” when providing an explanation to brokers of why their clients are turned down by automated system for an agreement in principal.
Private Finance director Edward Checkley explained: “When the lender relies so heavily on the information in the application matching the credit search perfectly, a small error or mismatch could cause the lender’s system to deem the application unsuitable.
“Lenders automated responses will typically be vague when notifying of a declined application, this typically takes the form of an email thanking you for the business but this is not one they can assist with.”
A post-MMR review published by the Financial Conduct Authority last month revealed that a number of lenders were failing to provide evidence of individual decisions due to inadequate record-keeping and reliance on automated processes.
Tom Cleary, senior mortgage adviser at Charles Cameron & Associates, said that while lenders had varying methods of communication, the general consensus was to provide guidance rather than a full explanation on why a client had been turned down.
He suggested that lenders could improve their record-keeping of decisions by creating a matrix to help identify patterns created by automated tools.
“If it’s a decline it tends to be due to the customer’s credit file or their affordability, but if it doesn’t fit affordability then we should never have got the stage of submitting the AIP anyway as we try to get all our ducks in a row before doing so,” Cleary added.
“The process isn’t perfect but I wouldn’t say it’s a massive systemic failing within the industry.
“If lenders aren’t looking for a pattern in their results there could be something fairly simple going on that they aren’t aware of. By keeping some sort of matrix which looks at why potential customers are getting turned down you could see patterns emerging.”