Conveyancers call for support to halt threats of violence and intimidation tactics
Threats of violence, swearing, name calling and intimidation tactics are some of the experiences property solicitors have endured since lockdown restrictions were lifted and house sales rocketed. Conveyancers say the behaviour highlights the need for change in the homebuying process and are calling for support from the industry.
All professionals in the property buying process have reported unprecedented levels of activity due to a combination of pent up demand, the stamp duty holiday and a desire to move to a larger home after lockdown.
But conveyancers say, as the last link in the property chain, they are forced to bear the brunt of client frustrations and abuse as they attempt to fulfil their legal responsibilities. Not understanding or respecting the role of conveyancing in the homebuying process, say solicitors, leads to unacceptable client behaviour which mortgage brokers and estate agents could help to relieve.
A shocking message posted on the professional networking site Linkedin laid bare the scale of the problem.
It read: “Fat c***, w****r, bunch of sh**s.
“This is language that has been levelled at conveyancers by clients in recent weeks – unacceptable isn’t it? We all know that moving house is stressful and that the SDLT deadlines have made everything worse. But clients must take responsibility for their actions.”
Author of the post, Lorraine Richardson, property solicitor at Adapt Law, said she had been compelled to write the message and host a talk on her YouTube channel, Conveyancing Matters, due to the heightened levels of abuse directed at her profession.
“The stress conveyancers have been under in the last 12 to 18 months is extraordinary,” she told Mortgage Solutions.
“Coal face conveyancers have been subject to a fair sense of rudeness from stressed clients for a long time, but the stamp duty holiday has massively exacerbated the situation.
“There’s not a great deal of respect for what we do. Some conveyancing has become commoditised which doesn’t help. It’s seen as a box ticking exercise. But the client also thinks they own you because they’ve paid a fee.
“Conveyancers are also the ones who have to give bad news, such as sorry you can’t move forward with the purchase because there’s a problem with the title.”
Having to repeat actions such as producing identification and bank statements when they have already submitted these documents to a broker and a lender also incites anger, Richardson added.
Stuart Forsdike, partner at PCS Legal, said his firm has been subject to various threats over the last 18 months which he has put down to the pressure buyers were under to complete purchases ahead of the 30 June stamp duty deadline.
“We had someone leave a voicemail to say they were going to drive to the office and run over the case handler,” said Forsdike. “In the last two months alone we’ve had people threatening to come to the office with a gun and another with a knife.”
Forsdike said while aggressive clients account for a small proportion of instructions, the level of frustration felt by homebuyers which occasionally leads to abuse “demonstrates the radical need for change in the conveyancing process,”.
He would like to see bodies such as the Law Society and Solicitors Regulation Authority produce literature for borrowers explaining how conveyancing works and how long it takes.
Encouraging clients to provide information pre-offer would also help to speed up the transaction, he added.
Estate agents and mortgage brokers could play their part by managing expectations and prepping their clients about the documents they will need to provide again to their solicitor even though they have already shown them to a broker and lender said Richardson. Sharing information with solicitors would also help to speed up the transaction, she added.
“Brokers will know if the borrower is receiving a gifted deposit from their parents but lenders rarely indicate on the offer that the source of the deposit is gifted,” she said. “When we find out, we have a responsibility to do ID checks on the parents and then disclose it to the lender even though they know, because it’s not referenced on the offer. If the broker told us on day one, at least we could do these checks straight away instead of finding out three weeks later.”
The Home Buying and Selling Group has begun work to tackle abuse and speed up the homebuying process.
The Association of Mortgage Intermediaries, part of the group, has been involved in the programme. Chief executive Robert Sinclair said the Department for Levelling Up, Housing and Communities was keen to work with the industry to simplify and speed up homebuying. The development of a cross-industry code of conduct to stamp out abuse is also underway.
“The property buying process causes some people to behave irrationally which can lead to unacceptable behaviour towards conveyancers,” said Sinclair. “The industry is aware of this issue and is proactively trying to find solutions.
“We’re doing a lot of work as part of the Home Buying and Selling Group to combat this behaviour. For example, we hope there will soon be communications coming out talking about how vendors need to be sale-ready.
“Could brokers do more to ease this abuse? Absolutely. Some do this really well, but some could do this better. Brokers should tell borrowers to start the legal process early and spend a little money investing in a solicitor who can start looking into any title issues on the property to reduce delays.
“The abuse often comes because the conveyancer has to tell the buyer there are defects on the title discovered much further down the line.”
AMI launches diversity and inclusion viewpoint event
The online webinar will take place at 10am on Thursday 21 October.
The association launched its survey in July asking professionals in the sector to share their views on people’s perceptions and lived experiences of diversity and inclusion.
Figures from the sector will discuss the findings of the survey to help give an insight into how inclusive the sector is and what more can be done to create a balanced industry.
The survey was supported by Aldermore and Virgin Money.
Register for the event by clicking this link: https://www.workcast.com/register?cpak=6868373356444044
Robert Sinclair (pictured), chief executive of AMI said: “I would like to extend my sincere thanks to everyone who took the time to complete our survey and to both Aldermore and Virgin Money for their support with this work. The survey gives us a real insight into the challenges faced by women and people from under-represented groups within the sector and highlights some of the changes needed to make a real and permanent difference.
“I hope that people will watch the presentation, read the report and take action, both as individuals and firms. We need to work together to ensure that our industry embraces society in its widest sense, ensures that everyone feels safe, included and welcome, and that we are truly representative of our customers, both now and in the future.
“The AMI board would appreciate your support by joining us on this journey.”
FCA staff report hundreds of laptops, tablets and mobiles lost or stolen over three years
The breakdown of 323 laptops, tablets, desktops and mobile phones going missing in 2018-19, 2019-20 and 2020-21 included 123 tablets in the most recent year.
The estimated cost of the misplaced devices was pegged at £310,660.
The losses add expense to the FCA, which is funded entirely by the fees it charges to the firms it regulates.
Robert Sinclair, chief executive at the Association of Mortgage Intermediaries, said: “It seems beyond belief that one in ten employees could have lost their device or had it stolen in the last three years. It might be that when they gave all their employees tablet devices they did not work well and the only way to have it replaced was for it to be ‘lost or stolen’.
“In our meetings, their staff continue to have connectivity and camera issues that we do not find with our member firms. It seems to be something the senior team at the FCA need to address,” he added.
The AMI warned last month that the rising cost of regulation to broking firms could force some brokers to exit the market. The slew of increases included changes to periodic and application fees, a new levy on principle firms for appointed representatives, rises to Financial Ombudsman Service levies and case fees and increases to the Financial Services Compensation Scheme levy.
Additionally, lost electronic devices represent potential data security breaches.
The FCA said: “We have strong security measures in place to ensure that data is protected in the event that a device is lost or stolen, including Bring Your Own Devices. We use encryption to protect information on FCA devices and two-factor authentication to ensure only authorised individuals can access the FCA’s network. We have clear processes to ensure losses are reported in a timely manner and access to the FCA network through that device is revoked remotely as soon as a loss is reported.”
It added: “Staff are also trained to not store sensitive data on their devices, to minimise the risk of data being exposed.”
Donal Blaney, founder of Griffin Law, the niche litigation firm which submitted the Freedom of Information request, said: “There can be no excuse for such carelessness by FCA staff with such expensive gadgets.”
The FCA has a duty to report certain incidents to the Information Commissioner within 72 hours under data protection rules.
AMI launches 15 minute industry diversity and inclusivity survey – take part now
With support from Aldermore and Virgin Money, the 15-minute anonymous survey run by an independent search agency is being offered to the whole cross sector industry, at every level of seniority.
Please fill in the survey here or share it with colleagues via the social media buttons at the bottom of the page.
AMI said the rising prominence of the issue and the discussion paper from the combined banking and conduct regulators will ensure that it continues to be a focal point for the industry.
Robert Sinclair, chief executive of AMI (pictured), said: “This is a subject that evokes significant emotion and this is your chance to give us your view. We’re looking to understand how inclusive our industry is and whether we can do more to help firms achieve diversity of thought and an inclusive culture? If so, where do we start?”
He added that much of the agenda is being driven by the younger generations and it is up to those of us who have been in the industry longer to accept the challenge, to keep up and to stay relevant.
“AMI is doing this work because people who I hope are my friends have been brave enough to bare their souls and talk about their lives and experiences. Inclusivity and equality needs allyship, partnership and feeding.
“I would like to think that AMI, by working in partnership with our member firms and lenders, can help firms make some tangible changes to how they embrace society in its widest sense and to ensure that everyone is able to bring their whole, authentic self to work,” Sinclair added.
Fill out the survey here.
FCA kicks off consultation on new regulation to go further than treating customers fairly
The regulator has called for feedback on its proposed new Consumer Duty regulation (CP21/13), which will consist of new principles and a suite of rules and guidance.
The standard of care the FCA wants to introduce would go further than the existing Principal 6 on treating customers fairly, and beyond the current Principle 7 on communications.
“It will require significant shift in culture and behaviour,” said Sheldon Mills, executive director, consumers and competition, at FCA.
The new regulatory concept puts greater emphasis on good customer outcomes.
The FCA is consulting on two sets of words.
Firstly, “A firm must act to deliver good outcomes for retail clients”. Alternatively, “A firm must act in the best interests of retail clients”.
Nisha Arora, director of consumer and retail policy at FCA, said: “They do have a difference in tone and we’d like to hear how they resonate with you, and which you think better reflects our policy intent.”
However Robert Sinclair, chief executive at the Association of Mortgage Intermediaries (pictured), said the move looked to be heaping unnecessary regulation onto mortgage firms, when few problems existed in the market.
“Instead of playing about adding more vague concepts, they need to get some feet on the ground and start regulating and supervising properly. They need to actually start doing the job they are paid to do, which is to supervise firms appropriately and properly, and to take action against those firms that are misbehaving,” Sinclair said.
He added: “They have all the tools in their toolbox to do it already. They don’t need more ideas, concepts or principles. I represent and operate in a sector that broadly does good things for consumers. If there is a problem they should be out here looking at it. They’re not, because the supervision teams don’t believe there are problems here.
“Please don’t impose a whole new layer of bureaucracy on us in order to deal with something that’s in other markets. We’ll end up spending an infinite amount of time producing documentation to evidence we are compliant with it. I don’t think fundamentally it will change the way people do their jobs today, because they are doing it properly already,” Sinclair said.
Suite of rules
Below the new Principle, there will be three cross-cutting rules whose purpose is to develop and amplify the standards of conduct expected under the Principle.
The first is to take all reasonable steps to avoid causing foreseeable harm.
The second, firms to take all reasonable steps to enable customers to pursue their financial objectives.
Finally, for firms to act in good faith, with conduct characterised by fair and open dealing.
Mills said that as firms’ use of online marketing and advertising, and data, had become more prevalent and sophisticated, there was “increasing risk of consumer exploitation or harm.”
“Firms have a much greater ability to analyse consumer behaviour and monitor exactly how they respond to different prompts and information, which can be used to take advantage of consumers’ behaviour,” he said.
The first stage of the consultation is open until 31 July 2021.
Top 10 most read mortgage broker stories this week – 04/06/2021
Elsewhere, readers’ attention was grabbed by the rising number of foreign buyers eyeing UK property, a sale of Nottingham Mortgage Services to Belvoir Group, and Nationwide’s decision to cut mortgage advisor numbers by 150.
FCA’s proposed network fee may cause firms to switch from AR to DA or exit market – AMI
End of eviction ban sparks calls for more tenant support
Mortgage broking arrives on TiKTok as advisers take to video platform to reach customers
Rising numbers of expats and foreign buyers eye UK property market’s opportunities
Nottingham Mortgage Services to be sold to Belvoir and serviced by MAB
First Homes scheme launches with seven lenders signed up
Nationwide to launch 0.99 per cent deal and FTB rates set to fall
Market Mortgage 95 per cent solution poised to launch with mainstream lenders in summer
Nationwide to cut mortgage adviser numbers by a quarter
House prices reach new record with double digit growth in May
FCA’s proposed network fee may cause firms to switch from AR to DA or exit market – AMI
In AMI’s response to the FCA’s consultation, the trade body said the combined impact of the changes in the regulator’s periodic and application fees, the new levy on principle firms for AR, increases to Financial Ombudsman Service (FOS) levies and case fees along with substantial rises in both levies to the Financial Services Compensation Scheme and professional indemnity premiums will have a “profound effect on firms’ profitability and potentially their viability”.
Chief executive Robert Sinclair (pictured) said: “These cumulative proposals display a lack of clarity, fairness and is undoubtedly misleading.”
And while firms may be able to cope with the rise in fees now, in a less buoyant market the changes could be difficult to bear.
The regulator has proposed a new fee for networks because it wants to increase its scrutiny of principle firms and their ARs.
It has proposed that principal firms will be charged a flat £250 fee per AR firm which the regulator expects will raise £10m in the 2021/22 financial year.
The FCA also wants to bring about a new fee category, A22, as a result of the network levy. The levy was not consulted on in the FCA’s November policy proposals.
The trade body has called into question the regulator’s rationale for creating the new fees category. AMI noted that it appeared to relate to general insurance and investment management with a suggestion that ARs are being used in sectors such as asset management and that half of all principles have only one AR.
AMI said this was not a recognised model in the mortgage broker market as around half of all intermediaries belong to large well-established networks. AMI has called out the FCA’s claim that it has previously been forced to address issues found within the AR market and wants details on how the regulator acted.
It was also noted that there is a proposed increase to the minimum fee on consumer credit where mortgage intermediaries have no income but are required to hold this permission as a technicality.
In its response to the FCA’s consultation, AMI wrote: “Through a multitude of business models, intermediary firms strive to provide fair value and good outcomes to their customers. This will not change, but it would be naïve to believe that the consumer proposition will not be affected by both the proposals in this consultation and by other increases in regulatory fees and levies.
“The impact to firms and therefore their customers will be masked by the current buoyant market that allows these costs to be absorbed. However, any future economic downturn may, in light of these changes, cause swift cost saving decisions to be made and the regulator should be mindful of any unintended consequences that may result.”
Sinclair also slammed the FCA’s approach to bringing in the new fee by only giving the mortgage market a five-week consultation period, which he said breached the principles of good regulation.
“We echo and support the significant issues raised by our colleagues at PIMFA (Personal Investment Management and Financial Advice Association) who share our concerns on the sudden and unexplained additional fees on networks. This £10m additional charge is a disgrace. The industry deserves a better explanation on why from this new FCA management team.
“The introduction of new fee category A22 is a change to the process of how the FCA introduces new fee policies and should have been included in the November policy paper with a full cost benefit analysis. This is a failure to follow proper process on the FCA’s part. Giving only a five week consultation window breaches the principles of good regulation.
“It is not inconceivable that current network models will be forced to change and that there could be a large migration of firms from AR to DA or leaving the market. In proposing these changes, the regulator must consider whether it would be comfortable with such a significant change to the mortgage intermediary sector structure and its ability to manage and control such a migration.”
Last month, the FSCS revised down its forecasted levy from £1.04bn to £833m which means mortgage intermediaries will be expected to contribute £12m down from the £22m stated in January. Despite the reduction, Bob Hunt, chief executive of Paradigm Mortgage Services and AMI’s Sinclair remain critical over the compensation brokers are expected to pay.
The only intervention the market needs is a long-term housing strategy – Marketwatch
He said decisions would rely on house price increases continuing to surpass income, favourable interest rates and high levels of transactions.
However, it was government policy such as the stamp duty holiday which has led to the arguable overstimulation of the sector.
So, this week Mortgage Solutions is asking: Is there too much intervention in the mortgage and housing market?
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries
As government has continued to support the housing and mortgage market by retaining Help to Buy, introducing First Homes and providing stamp duty reductions, the Financial Policy Committee (FPC) has retained controls over lenders to ensure the market does not overheat.
Controls on loan to income (LTI) and stressing shorter-term rates, whilst frustrating to some, do ensure affordability of individual loans and avoid some concentration risk within lenders.
We are, however, seeing house price inflation defying economic norms as both GDP and employment are constrained.
Those in work with a feeling of continuity are fuelling a housing market where there is a shortage of supply of decent stock for sale with significant pent-up purchase demand.
Indeed, with issues in the flats market, house price inflation may not be quite what it seems as only houses are really being transacted in volume.
What is certain is that with the heat in the current pricing of property it is much less likely that we will see the FPC relax its LTI or stress rate constraints.
If it did, it would feed more demand into what many see as a stretched market, particularly with the concerns over what might be happening with general inflation.
The problems created by market interventions the government introduced to stimulate the economy and provide positive consumer sentiment, need balancing controls from the FPC.
Whilst hard to explain to the consumer who wants their dream home with a mortgage that might cost less than their current rent, longer term market stability is important for us all.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association
The government has provided extensive support to the housing sector since the start of the crisis, which has helped stimulate activity and boost confidence.
However, while this has been done to prevent the market from stalling, the effect has been to boost what was already quite healthy purchase activity.
One of the challenges associated with this recent intervention is how it works within the current regulatory framework.
The affordability and stress testing introduced as part of the regulator’s Mortgage Market Review requires lenders to limit the proportion of lending they conduct at more than 4.5 times an applicant’s income, and the additional three per cent stress test required by the FPC also means those purchasing a home need significant household income to access the funds they need.
IMLA and other trade associations have long argued that these measures may be too restrictive and are preventing quality borrowers from accessing homeownership.
We do know these measures are currently under review and only last week the Bank of England published a blog, in its ‘Bank Overground’ series, which suggested the stress test on borrowing could be preventing as many as two per cent of tenants from being able to buy a home.
It is hard to say whether there has been too much intervention in the market recently, or whether these actions have been a benefit or hindrance.
It takes time to understand the true impact of new policy and we will need to see how the market develops. However, changes could be made to open the door to borrowers who are perfectly good credit risks.
Regulatory changes may finetune the benchmarks above and below which borrowing is possible – but the intervention that the market really requires is a long-term housing strategy to ensure the UK builds more, affordable homes.
Richard Campo, managing director of Rose Capital Partners
Personally, I think the balance on risk and lending at present is about right.
If you have less than a 25 per cent deposit, it isn’t easy to get the lending you want if it is anything outside the most vanilla of applications.
Perhaps that isn’t a bad thing as I well remember the run up to 2007 and the lending market is not even close to what it was back then.
Policymakers need to take into account that we have had five years of suppressed activity in the housing sector largely down to Brexit, and subsequent years of delays and procrastination.
As a result, if you just look at the last six to nine months, yes it looks like a boom. The stamp duty holiday is also masking what real levels of activity are.
If you look at activity levels over the last six to nine years, you see a very different picture as house prices and lending, especially in London and the South East have been particularly suppressed.
This is particularly felt in the high-end market as many properties over £2m are either the same value or less than was the case in 2016. I appreciate that is never going to get any sympathy, but it is a reality.
So to put brakes on the market now will only hamper future and natural growth, which surely should be the aim of any government and regulator?
The move to affordability-based lending, which came out of the Mortgage Market Review in 2014 I feel is right. If we make things too tight, it stifles growth. Too loose, you create a bubble.
So maybe policymakers need to do the hardest thing of all – nothing.
FSCS levy reduction welcome but fees are still ‘eye-watering’ – AMI
Today, the FSCS announced it had revised down the levy for this year to £833m, with mortgage brokers having to contribute £12m instead of the originally stated £22m.
Robert Sinclair (pictured), chief executive of Association of Mortgage Intermediaries (AMI), said: “The FCA and firms can take no comfort in this reduction. The amount of compensation for the failure of the FCA to adequately control markets is still eye-watering.
“The amount mortgage and protection advice firms have to pay will now be only slightly higher than last year, but the guillotine remains over their necks for a further levy later in the year.”
He put this down to mishandlings in the investments and pensions sector, which, he said, was not the responsibility of advisers in the mortgage and protection sector.
Sinclair added: “AMI remains of the view that the funding of the compensation scheme still needs the development of a new approach. As a minimum Treasury must allow FCA to retain financial penalties to reduce the amount good firms are being asked to pay.
“A new product levy that all consumers pay would be the simplest solution to ensuring a more durable funding mechanism to compensate consumers, whilst avoiding the jeopardy firms face each year as the scheme has to hand round the begging bowl.”
Mortgage firms facing fines for failing to submit Directory Persons information – AMI
The association was informed by the Financial Conduct Authority (FCA) that over 2,800 investment and mortgage advice firms had not yet done this despite the original deadline being 31 March.
The Directory Persons list is part of the Senior Managers and Certification Regime (SM&CR) and requires firms to submit certified staff of sole traders and appointed representatives.
These will be people who are qualified to carry out regulated activities with clients.
Additionally, if the information is not submitted correctly approved people may have their regulatory permissions removed.
Robert Sinclair (pictured), chief executive of AMI said: “There appears to be a significant number of investment and mortgage advice firms that have not advised the FCA of the requested adviser details by the end of March as required.
“The FCA has written to all those firms giving them a short time to rectify the position. AMI has written to all its member firms and are providing support to ensure they are all compliant.”
He added: “Firms who are not members should take urgent action if they get an email from the FCA regarding the directory and not ignore it as the implications are serious.”