The first comment was in response to the story: Broker wins case against charge of mis-selling interest-only mortgage
Andy Wilson said: “As always, a robust file will help to protect against losing claims such as these, which are likely to become more and more common whilst we live in a ‘sue culture’.
“It is not enough to give your clients sound advice, you need to be able to prove you gave them sound advice.”
Acceptable strategy
He added: “Converting an interest-only mortgage to a capital and interest loan in the future is an acceptable repayment strategy, as long as the effects and risks of such a strategy are carefully explained to the client upfront, and in writing. There would also need to be evidence on file of how this change would become affordable, preferably with some stress-testing calculations in place too in case interest rates rise in the meantime.
“It would not be an acceptable strategy however, if there was no likelihood of meaningful changes to the borrowers income in the future to be able to afford to convert in this way.”
Documenting evidence
“We also know all too well that borrowers conveniently forget they needed to put in place a plan to repay the debt at the end of the term. They can also conveniently suffer total amnesia when asked to recount conversations that may or may not have taken place with their adviser, especially when someone is given a whiff of possible compensation, so documented evidence on file and saved forever is key,” he added.
Wilson said: “As an example, my supervising network sensibly keeps electronic files for 80 years, and this is solely to be able to defend complaints.”
Long live the BDM!
Last week’s Star Letter comment, which questioned the need for business development managers (BDMs), also garnered responses.
Simon Wilkinson kicked off the support for BDMs, saying: “A good experienced BDM is a lifeline for brokers and their value should not be in question.
“The idea of different lender BDMs sharing a WhatsApp group is excellent and a useful way of getting cases placed and co-operation between BDMs is a useful resource for brokers.”
Danielle Panteli weighed in, adding: “BDMs are so valuable. I’d say I speak to at least one of our BDMs once a week.
“Some I’ve known through my almost 20 years doing the job and are more like friends. A BDM’s guidance, help, advice quite often decides if a case goes through or not. I’ve had more situations than I can count where a case has been declined and a BDM has managed to turn it around.
“I, for one, love our BDMs and love seeing them in the office for a coffee and catching up. It’s also hugely valuable for new staff to learn the lenders USPs and during the last year we’ve relied heavily on our BDMs support with various changes in criteria especially for the self-employed. Long live the BDM.”
Arron Bardoe said: “How can any broker demonstrate they are maintaining their awareness of lenders’ criteria and getting their clients the best deals without speaking to their BDMs?
“While the quality varies in what support a BDM can provide, they make all the difference in my business.”
Tiffany C saw things from both sides, saying: “Not all BDMs from each lender are as co-operative or truly adding any value compared to others.
“I know some BDMs who go the extra mile for me and my cases which makes a huge difference than if I didn’t have that relationship in the first place. There are certainly some BDMs who are just there and not adding any extra value than if I called the broker helpdesk or looked it up on their website.”
This week’s first comment was a response to the article: Without BDMs, it is difficult to make ‘out-of-policy’ cases fit – Marketwatch
Andrew Ducksbury said: “Before regulation, business development managers (BDMs) were the lender’s sales force.
“They had targets, appointment targets and were pushed onto the broker community by lenders – since regulation you don’t need BDMs.
Ducksbury added: “If, as a broker, you are any good, you don’t need to be sold to in order to use a lender. You use the lender because for they are the best available for the customer you’re dealing with.
“I’ve not allowed BDMs to make appointments with me at my office for years.”
Benefits of advice
Robert Drury responded to the article: Product transfers: Benefit to the customer or the lender?
He said: “We contact all our clients three to four months before the maturity of their current deal, and while some clients do go direct to the lender due to the ease of the process nowadays, many also come back to talk to us.
“The loan to value (LTV) is only one area for discussion – do clients want to borrow more? Borrow less? Decrease the term?”
Drury added: “Even if my advice is to stay with the existing lender, our clients really appreciate that time spent discussing their biggest financial commitment.
“Two hours every two to five years seems to be time well spent with our clients and many of them allow me to make the product transfer for them, on their behalf, as we cement our relationship with the client for the next time they look to review their mortgage.”
The first comments came in response to the article: Lenders that cull BDMs do so at their peril – JLM
Nick Morrey said: “The skill set of a business development manager (BDM) is actually not inconsiderable and their use to brokers for both pre-submission vetting and troubleshooter is invaluable.
“I know some brokers will choose between two similarly priced lenders based on the BDM service that they may need.”
He added: “I am in support of the above article on behalf of brokers everywhere. Lenders have had both a tough and bumper year so to then make culls in their support divisions would be both unfair on individuals who have likely worked very hard from home, often deepening relationships with brokers who didn’t engage pre-pandemic, and harmful to future profits.
“In time, face-to-face visits will return, good BDMs will be at a premium so don’t let go of yours just for a teeny positive blip in profits to mask other failings. ‘They do so at their peril,’ indeed – and don’t say you weren’t warned.”
An anonymous poster was in agreement, saying: “I concur. At least 50 per cent of the web chat interactions I’ve had have been less than worthless because they wasted my time.
“Whereas being able to speak to my BDM I was on occasion able to persuade them to go outside criteria to place a case for an exceptional client.”
Balance lender loss with ERC
The next comment was to the story: Legal & General trials equity release fixed early repayment charges
Andy Wilson said: “The charging of early repayment charges (ERCs) is to reflect that potential loss to the lender of the client paying the loan back early.
“However, I have long maintained that if some lenders can use fixed ERCs for lifetime mortgages that will charge a maximum of 10 per cent of the loan amount, there is no clear reason why lenders charging gilt based penalties can justify up to 20 to 25 per cent of the loan as a penalty charge.”
Wilson added: “Surely the loss to the lender of early repayment cannot be so different? The fixed charged penalty lenders would suffer massive losses if the real loss was up to 25 per cent of the loan.”
High gilt-based ERCs
He said: “I attended a recent workshop on gilt-based ERCs along with many other brokers.
“None of the three lenders using gilt calculations for their ERCs could offer any solid justification for such high gilt-based maximum penalties, while fixed ERCs as low as five per cent of the loan for five years followed by just three per cent for the next three years are available elsewhere.”
“There are two huge criticisms of lifetime mortgages on social media – the potentially huge increase in rolled-up debts due to high rates of interest in the past, and ERCs for those trying to get out of the past high-rate deals now,” he added.
Wilson said: “The sooner we can start to show the ERC amounts reasonably mitigate some loss to the lender for early repayment, the better.”
This week’s comment was in response to the article: Cladding loan scheme should be abolished and paid for by industry and state, say MPs
Arron Bardoe said: “In what other world would the victim be expected to pay remediation?
“Where they are still trading, the developers should be fixing these problems or using their professional indemnity cover; and in turn they can sue the providers of the cladding if they remain in business.”
He added: “If the government does decide to alleviate owners of the costs, it may help lenders to agree their mortgages, as they currently factor in the cost of any future works when considering applications.”
The first comment was to the story: FCA announces £10m fee for networks to tackle AR oversight failures
Paul Smulovitch said: “For the average appointed representative who represents no risk and follows rules diligently, this is just more cost and likely to be even more red tape when time is already precious.”
Facing ‘keyboard warriors’
The second comment came from Andy Wilson, under the article: Banter and bullying or community and kindness: five brokers open up about life on social media
Wilson said: “I post quite heavily on LinkedIn, and occasionally on my own Facebook business page, but Twitter has for me fallen a bit by the wayside.
“However, there are a lot of companies advertising for equity release on Facebook, and many of them are lead generation companies for equity release products.”
He added: “Almost inevitably, there will be anything up to 100 or more posts which are knee-jerk reactions from people who clearly do not understand the modern products, with flexible features and benefits.
“’Don’t do it’ and ‘it’s a con’ they cry. So, I challenge them. ‘Why do you feel like that?’ or ‘what makes you say that?’.”
Wilson said: “Those who bother to reply, and who aren’t simply keyboard warriors posting for a jolly, do state their arguments about it, but they are nearly always related to old non-regulated products with high exit charges, and bear no relation to the lifetime mortgages of today.
“I try to educate and explain, but it is an uphill struggle with some. Some are violently opposed.”
He added: “One poster was so incensed by the fact that I, as an adviser, had dared to challenge the seemingly popular view that all those involved with equity release should be hung, drawn and quartered, and even went so far as to post personal attacks on me, including a statement that he grouped me in with child molesters and paedophiles.
“My wife was horrified, but I simply reported the posts to Facebook and within 20 minutes they had deleted his posts and issued a warning.”
Wilson concluded: “Social media can be an offensive place. You just need to keep everything very polite and professional, and eventually some will realise you may actually be worth talking to after all.”
This week’s comment was in response to the article: Broker FSCS levy soars as pensions sector ‘blind’ to fraud and bad advice .
Derek said: “There is a guideline in our industry that relates to treating customers fairly. How about that applying to advisers?
“Start treating mortgage advisers fairly.”
He added: “We seem to be monitored, regulated and compliance checked to the hilt while dealing with clients who often are reluctant to pay for the service.
“We now find that we are having to pay for the failings of the pensions and investment advisers, every one of which I know have fee levels and incomes far exceeding those of any mortgage adviser I know.”
This week’s comment was a reaction to the story: Virgin Money braces for surge in bad debts while mortgage lending falls 30 per cent
Stuart Phillips said: “I’d be more interested to know how a lender is going to differentiate between a ‘bad debt’ as a result of Covid-19 and a bad debt because the client is a high risk.
“If lending volumes are expected to dip, lenders are reluctant to increase costs and adverse credit cases will rise, how is the market going to adapt to that?”
He added: “I have to assume that lenders will want to continue lending to clients who were genuinely disadvantaged because of a pandemic, but no one is really talking about that.”
The first comment was from Stuart Philips, who reacted to the article: Vulnerable borrowers and first-timers most at risk from Covid-hit mortgage market – FCA Insight
He said: “Whilst 70 per cent of mortgages in the UK go to the big eight lenders who will struggle to adapt to this with very rigid credit and risk policies, there is a huge opportunity for building societies and challengers who have the ability to look at cases on their own merits.
“Outside the big eight there are still another 50 or so lenders in the market.”
Philips added: “The problem is in matching complex clients with niche lenders because there is no financial incentive for brokers to put in the extra work required in these cases. The procuration fee on a £100,000 loan is the same regardless of whether you send it straight to HSBC with a few hours work or spend days on the phone to business development managers.
“Higher broker fees for complex cases affect those who can least afford them. The Financial Conduct Authority (FCA) and the industry as whole should be looking at this for a solution.”
High LTV caution
The second comment responded to the story: Lenders seek FCA permission to re-enter high LTV mortgages at same time
Kevin Roberts said: “Lenders should be applauded for considering a simultaneous return to higher loan to value (LTV) lending, a request I hope the FCA will sanction in due time.
“Nationwide Building Society had the courage to remain in the market whilst a handful of others dipped in and out in a way that was helpful to an extent but perhaps added somewhat to the frustration of our clients.”
He added: “May I temper this promising news with a note of caution.
“Working from home for these parties may not work as well as it should after seven months or more of planning. I fear that adding more transactions to an already protracted process will lead to a further deterioration in service and timescales.”
This week’s comment came from Derek in response to the article: Advisers self-serving queries means lenders can stay at 90 per cent LTV lending longer – Duncombe
He said: “Everything in the article is correct, but it is based on the lenders keeping their information up to date and providing accurate information and updates, and as much as they would like to think they are perfect, they are not.
“We don’t call you because we want to, we call you because we have to.”
Smaller lender successes
Derek added: “I have to say that Accord and a number of smaller lenders are doing a great job, but larger lenders are really letting advisers down…
“This is not just down to being busier and staff working from home as relatively speaking, smaller lenders have the same percentage increase in business with smaller staff levels and are also working from home.
“They are however assessing documents in as little as 24 hours in some cases.”
Accurate information
“Lenders do not update their websites quickly and so information can be out of date or written in an ambiguous manner and we all know that some criteria never appears on the websites at all.
“If an adviser provided a service that was as repeatedly poor and inaccurate as these lenders, then the lenders would consider deselecting them” he added.
Derek added: “In short, advisers, carry on using the websites, sourcing systems and criteria tools.
“Lenders sort out your websites so the questions to criteria issues can be found quickly and accurately and sort out your systems and staff training.”
This week’s comments were under the article: Advisers cannot just ‘dabble’ in equity release for extra cash – Star Letter 30/10/2020
John S kicked things off, saying: “Although I agree with the main comments that advisers shouldn’t dabble in any business area, I feel it is suggested that mortgage advisers in the residential market don’t need to be empathic, honest, responsible and altruistic.
“All we need to do is research on Trigold and choose the best rate – no experience or a deeper understanding of what makes the lenders tick required.”
“However, if you accept that non-equity release advisers already have these skills and apply them in their current jobs and could even be considered diligent and professional, why would they move into a new business area and act any differently?” he added.
Referring complex cases
LankyDes also weighed in, saying: “I don’t think Andy is saying that most of the people in the industry would be unsuited to it; just that they should be really serious about making it a major part of the business.
“I’m actually coming to a similar conclusion now days about protection. It is just so complex that I would rather refer it all to a specialist.”
He added: “I did one equity release ever under the grandfathering arrangement about 15 years ago. I put a lot into involving all the family in the discussions, the explanation of the deal and getting them all to sign the product confirmation letter. I also looked into the state benefits and things like that.
“I came to the conclusion after doing it that it wasn’t an area I wanted to get involved in.”
