Conveyancers could struggle to complete transactions to meet stamp duty holiday – Sinclair
The Association of Mortgage Intermediaries’ (AMI) chief executive said the trade body raised concerns with the government about an impending stamp duty “cliff edge” if transactions fail to meet the end of March deadline.
He said: “The volumes of transactions we’re seeing flowing through might mean there will be issues with the ability of solicitors and conveyancers to complete all of those transactions by the end of March.
“We’ve made them aware of the issue and told them there will be ongoing discussions regarding the capacity of the market to complete these transactions in an appropriate way so consumers can appropriately benefit from the allowance that’s been given by the chancellor.”
Sinclair also said brokers should tell clients to be responsive to solicitor enquiries and advise sellers to have everything in place to avoid slowing the process down.
“Clearly there are some chains that are more complex than others and therefore making sure all the people in the chain are similarly minded to get things done in a speedy manner is key to all of this,” he added.
Sinclair said he hoped any transactions which did miss the deadline would not result in legal challenges for the broker community but said having discussions and thinking about it now could reduce the chances of that happening.
He added: “We’re still five months away from this point, so as long as we have good open dialogue and appropriate planning and good dialogue with government as well, we won’t have any issues.
“The reason I’m flagging this early is to allow proper debate and planning.”
IMLA and AMI join forces to tackle lender service issues
The surveys will be conducted over the next few weeks and the different factors which affect each lender will be examined.
With the information received, IMLA will work with intermediaries and industry bodies including the Association for Mortgage Intermediaries (AMI) to find possible solutions.
Since the mortgage market reopened in May, lenders have struggled to maintain service levels as they coped with high volumes of business.
Many have resorted to withdrawing products or repricing mortgages in order to manage service levels. An increased need to look at changing customer circumstances more closely has also slowed down underwriting timescales.
Much of this increased demand has been fuelled by pent up activity during the property market’s lockdown as well as buyers and sellers trying to complete transactions before the stamp duty holiday ends.
Kate Davies (pictured), executive director of IMLA, said: “The focus of lenders remains, as it should, on acting prudently and lending responsibly within their regulatory commitments and – ultimately – to protect borrowers.
“However, the current situation is clearly continuing to impact service levels and we need to identify the main reasons for this and try to find ways of alleviating the logjams.”
She added that the association needed to be clear about what was “realistically achievable” with its solutions and try to manage the expectations of borrowers and intermediaries.
“The Covid-19 crisis has emphasised the need for borrowers to be given good advice about their mortgage options, and I believe that most borrowers will understand and appreciate that good advice and responsible lending may take a little longer in these exceptional times.
“We now know that we all face further restrictions on our lives – probably for another six months. But we also know, from the way the industry has coped so far, that we are up to the challenge,” she added.
Robert Sinclair, chief executive of AMI, said: “We have an incredibly busy mortgage market at the moment. While the strong levels of activity we are seeing is certainly a positive sign of the sector’s resilience, it is continuing to present difficulties for lenders as they battle demand.
“Whether we are advisers or lenders, we are all in this market together and it is vital that we work in partnership to find ways of overcoming these difficulties.”
He added: “This is a welcome step from IMLA towards highlighting and resolving factors that are impacting service levels for customers and we are eager to work jointly with its members as they evaluate their findings and identify solutions to the current challenges we are all facing.”
FCA complaints compensation should come from exec bonuses – Sinclair
Sinclair also slammed the complaints scheme consultation launched by the regulator in July as a “disgrace” for proposing to cap its liability at just £10,000 per case.
Speaking at the Association of Short Term Lenders (ASTL) annual conference, Sinclair strongly criticised the regulator and said it needed to mirror the industry and accept liability for its mistakes.
“The FCA’s decision to try to run through an eight-week consultation rather than 12 weeks in order to protect itself from criticisms of its own complaints structure was a disgrace,” Sinclair said.
“That’s the only words I can use.
“We were very strong in our response that we were about to submit that they should have done a 12-week response but they’ve now extended that under pressure from the Treasury Select Committee.
“They recognise that they made a wrong decision in the first place – a regulator should not reach that point very often in their careers.”
The lack of acceptance or meaningful change to anything the regulator did in the consultation also frustrated Sinclair.
He continued: “The complaints commissioner said there were fundamental flaws and failures in handling and responding to complainants and the consultation did absolutely nothing to address anything around that. Nothing.
“The consultation was cosmetic, capping how much they would have to pay while causing distress and inconvenience and capping if they made a mistake at £10,000 per case.
“Businesses would love to get away with that rather than £355,000 which is the cap at the ombudsman service, and uncapped in court. Only this regulator could do that.”
‘The only fair way’
Fellow panellist Ray Cohen, managing director of Jackson Cohen, suggested that would inevitably mean regulated firms would end up paying more to cover compensation.
However, Sinclair argued the FCA should accept the liability themselves.
“The FCA has a bonus pot for all its staff and executives; anything they have to pay out in complaints comes out of that bonus pot – it’s the only fair way,” he continued.
“They said they implemented the senior management regime internally, but there is no liability for anything they do wrong. There has to be liability because there is for every other firm.”
The FCA executive committee has deferred any bonus payment until the report of the investigation into the circumstances surrounding the collapse of London Capital & Finance (LCF) has been issued.
David Copland to leave LSL and AMI
Copland will also depart from his role at deputy chairman on the Association of Mortgage Intermediaries (AMI) board, where he has been for nearly eight years.
He joined LSL when the group acquired Pink Home Loans in 2010, where Copland was CEO. Before this, he was the founding director of Pink Home Loans which was established in 1988, before going on to launch the Pink Mortgage Club and the Pink mortgage network which is now part of Primis.
Copland (pictured) said: “I have thoroughly enjoyed my time with LSL fulfilling a number of roles including supporting the hugely successful TMA mortgage club, managing mortgage lender relationships on behalf of the group and more latterly working on digital propositions, including the investment in Mortgage Gym.
“2020 has been a turbulent year for the mortgage industry, but Primis and TMA have performed extremely well throughout this period and I will leave proud in the knowledge that these businesses are in great shape and well positioned for future growth.”
Jon Round, group financial services director at LSL, added: “I would like to take this opportunity to express my sincere thanks to David for his support and contribution over the last ten years.
“David has played a significant role in the successful growth and direction of our financial services businesses, applying his depth of industry knowledge and insight. I will miss working with David as a colleague – and as a fellow West Bromwich Albion fan – but I wish him every success for the future.”
Mortgage Vision: Brokers should be saving now for hard times next year – Sinclair
Speaking at the Mortgage Vision event, Sinclair said the industry was enjoying a period where “transactions were at a very good level” and lenders had never been busier.
However, he predicted the market may enter a tough period in the middle of 2021.
“While we’re making money, make sure we’re putting some away because I do think when we get to Q2 or Q3 next year, times will get a little bit harder.
“Therefore, saving some money now and putting it away to sustain us through the rainy times that I think might come in 2021 might be a very good idea.”
It is also important for advisers to talk to their customers and understand their needs to protect future business, Sinclair said.
“Remortgage and products transfers are as important as full-blooded purchase property transactions because staying close to existing customers and earning money from them is the key to having a future sustainable business,” he added.
Mortgage prisoner help
Sinclair said brokers who responded to the Financial Conduct Authority’s (FCA) call to action to help mortgage prisoners should prepare to be contacted by lenders before the end of the year to find out how they can get them onto better rates.
He said: “I expect the third-party administrators will issue their letters to the prisoners that they deem can be helped during October and November this year.
“I expect during September, a group of lenders to come to market with either new products or new policy or new processes.”
Mortgage Vision: No Pure Legal mis-sold mortgage claim has been upheld by court – Sinclair
Speaking at the Mortgage Solutions Mortgage Vision event, when asked if any Pure Legal claims had been upheld or paid out, Sinclair (pictured) said he was aware of just one claim which was settled out of court after the legal firm walked away.
The damages for this claim are yet to be awarded.
He also noted another case where “the insurer stopped it from going to court, but the payout damages were negligible, and they came to an agreement with the firm that was taking the case.
“There have been no decisions as yet upheld by a court having gone through the full case,” Sinclair said.
Sinclair asked brokers to notify AMI of any cases that have gone to court so that it can co-ordinate an overall approach on the issue. This was seen as important particularly as some firms still struggle to acquire professional indemnity insurance owing to concerns about possible mis-selling.
“We’ll deal with any case where there is genuine customer mis-selling or any harm, but we will not accept vexatious claims from people who are just trying to make money for themselves,” Sinclair said.
In 2018, the Financial Conduct Authority (FCA) warned that interest-only borrowers could risk losing their homes if they had no repayment plans in place at the end of their term.
This resulted in a drop in take-up of interest-only mortgages and a number of complaints that the mortgages had been mis-sold.
Speaking with the regulator
Sinclair is to begin talks with the FCA and Treasury, with a view to encouraging insurers to overlook “legacy issues” on mis-sold mortgages and to provide cover.
“I have my first meeting with the FCA on Friday to go through with them exactly what the position is, what the issues are, and to make sure we’ve got a way of taking this forward to help the insurance market understand that the risks in this are hopefully minimal,” he said.
However, Sinclair cautioned that brokers moving into new product areas or markets, such as later life mortgages or bridging, increased insurers’ reluctance to service the mortgage market.
He added that the FCA’s recent study on the later life market – which suggested not all firms were giving advice in the best interests of clients – did not help.
“Insurers will be much more nervous about taking that on,” he said.
AMI welcomes FCA fee reduction for intermediary firms
In its policy statement for 2020/21 which was published last week, the regulator confirmed it would freeze fees to protect smaller firms which make up 71 per cent of regulated companies.
This means for firms whose turnover has remained consistent, there will be a year-on-year reduction in costs, largely due to a decrease in the levies paid towards the Financial Services Compensation Scheme (FSCS).
The fees to be paid by mortgage firms in 2020/21 have been reduced by one per cent to £6.8m.
For firms that are in the medium and smaller category with a turnover of less than £10,000, payment will be due within 90 days of the date of the invoice instead of 30 days. Larger firms are expected to pay their fees and levies under usual terms.
Robert Sinclair, chief executive of AMI, said: “AMI welcomes the reduction in FSCS fee costs for firms in the midst of this pandemic and at a time when capital resources are more challenging for firms.
“Whilst delighted that firms will not see a real increase in their total fees and levies costs this year, we remain acutely aware of the challenges faced by firms and the interrelation between capital adequacy requirements, professional indemnity insurance, Financial Ombudsman Service and the FSCS costs.”
“I was heartened to hear Charles Randell’s [FCA chair] statement that they needed to redesign the system to ensure that polluting firms in the financial sector pay, not those who have behaved well.
“AMI will continue to work to hold the FCA to account and ensure that intermediary fees are proportionate to the risks posed,” he added.
AMI calls for FCA Covid-19 support to be extended to all mortgage firms
This was part of the association’s response to the FCA’s consultation on regulated fees and levies for 2020/21. In its consultation, the regulator proposed to freeze regulation fees for smaller firms to support them through the health crisis.
It also proposed to extend payment deadlines for small and medium firms by two months, giving them three months in total to pay fees.
This includes firms who pay £10,000 or less to the FCA, Prudential Regulation Authority (PRA), the Financial Services Compensation Scheme, the Financial Ombudsman Service, Money and Pensions Service, Devolved Authorities, the Payment Systems Regulator, the Financial Reporting Council and under the illegal money lending levy.
AMI said the whole intermediary sector needed the FCA’s support to ensure firms survive the crisis not only in the short-term, but also into the next year in case cash flow levels do not recover.
Robert Sinclair (pictured), chief executive of AMI, said: “Whilst we support the freezing of fees for smaller firms, we cannot support this cost transfer to larger firms. The changes to the proposed fees in light of the Covid-19 pandemic should have been greater and further reaching.
“We are concerned that the FCA’s fee proposals neither reduce its current expenditure nor suggest an intention to reduce spending next year in view of the likely reduced turnover of and indeed likely reduced number of regulated advisory firms.”
Sinclair said the regulator should look to reduce operational costs where possible, instead of continuing with plans that were appropriate before the crisis impacted the market.
“Essential costs including authorisation, supervision and enforcement must be prioritised over strategy and competition agendas until there is a clearer view of the post-lockdown landscape,” he added.
AMI urges insurers to keep paying commission on paused premiums
The Association of Mortgage Intermediaries (AMI) wants insurers to be clear on how they will treat commission payments during a customer payment deferral. The trade body says a sensible and fair approach would be for commission not to be affected at all.
Mortgage brokers must also be told what other types of support insurers are offering policy holders so they can advise them on the best option for their circumstances, which may not always be to defer paying their premiums.
Insurers that allow policy holders to pay back their paused premiums over a period of months rather than in a lump sum have the backing of the trade body, which says this approach will encourage customers to keep their cover in place instead of a cancelling their direct debit.
The Financial Conduct Authority (FCA) announced the introduction of temporary measures to support insurance customers last week. From 18 May, customers should be able to request a payment deferral at any point up to 18 August 2020.
If a payment holiday is not the best option for the customer, firms should offer reduced repayments, or reschedule the term; waive missed or late payment fees; or allow a customer to amend their repayment date without any cost.
Firms will also need to consider whether other products are more suitable to meet a customer’s needs or whether cover needs to be revised.
Stacy Reeve (pictured), senior policy adviser at AMI, said: “Communication between insurer and intermediary is key so that the help can reach those customers who need it the most. The FCA has been clear that they will want to see firms across the distribution chain working together to ensure that customers are treated fairly, so joined-up communication is vital.
“Intermediaries may wish to use this FCA guidance to ignite protection discussions with their customers. Customers may be actually or potentially vulnerable and the uncertain situation we find ourselves in can be very unnerving for many. Ensuring that customers maintain appropriate cover has got to be the aim.”
AMI: Industry at heart of restoring economy but it’s not a return to normality
The trade body representing mortgage advisers noted that a return to full operations may take some time and emphasised that employers still had a legal responsibility to protect their staff.
It added that additional training may be required to ensure new requirements are understood and that the “highest safety standards will be absolutely paramount”.
However, AMI supported the changes “which put our industry right at the heart of restoring economic activity in the country”.
“AMI expects that the full return to operations may take some time. As government guidance is clear, staff should continue to work from home if at all possible. The vast majority of mortgage advice can be completed from home via IT support and telephone,” a statement from the body said.
“Employers have a legal responsibility to protect workers and others from risk to their health and safety.
“This means they need to think about the risks their employees face in estate agency, new build and other office environments and do everything reasonably practicable to minimise them.”
It noted that firms will need to consider which employees should be returned from furlough and highlighted the importance of fulfilling the safety guidance.
It continued: “Staff will need additional training to ensure that they understand the new requirements and procedures which will take longer and be more complex.
“The majority of activity will need to be by appointment and be with people from single households.
“All businesses should continue to follow the government’s latest guidance for employers and businesses on coronavirus and safer working guidance.”
Not a return to normal
Chief executive Robert Sinclair (pictured) emphasised this “does not represent a return to normality”.
“The process of finding and moving into a new home will need to be different given those involved in the process will have to adapt practices and procedures to ensure that the risk of the spread of coronavirus is reduced as far as possible,” he said.
“However, it does signal that firms involved in new build sales and advice, estate agency, valuations, conveyancing and removal as well as mortgage advice can open and transact.”
Sinclair added that adherence to social distancing and the highest safety standards will be absolutely paramount and all precautions will be taken to protect people viewing property.
“We also have new industry guidance covering estate agents, valuations and moving which has been developed to ensure we keep people as safe as possible in the process,” he continued.
“Getting physical valuations and removals back makes a big difference, but we all have a role to play in ensuring everyone acts responsibly.”