NEWS
SALE-AND-RENT-BACK
Some B2L loans are used to fund
rent-back deals, lenders warned
8
www.mortgagestrategy.co.uk
● NATALIE MARTIN ● ROBERT THICKETT
Lenders are being warned that some
borrowers are using buy-to-let mortgages
to fraudulently fund their saleand-rent
back portfolios.
Specialist rent-back law firm
Wright & Wright Solicitors is warning
lenders that once the sector is
regulated they could be committing
fraud if they outsource the collection
of defaulted mortgage payments
to third parties.
The Financial Services Authority
recently issued its near-final rules
on regulation of the rent-back sector,
stating that letting agents who
“perform functions such as collecting
rent from an agreement seller
are required to be regulated”.
Julian Sampson, partner at
Wright & Wright, says: “If a lender
has unknowingly supplied a buy-tolet
mortgage on a property which is
REGULATION
● NATALIE MARTIN
really being used for rent-back and
that borrower defaults, the lender
may commission a third party to collect
payment.”
But he adds that under the FSA’s
guidelines the payment collector
would need to be regulated.
Wright & Wright believes several
lenders already have experience of
this activity.
Sampson adds: “I have heard that
some lenders regard cases such as
this as breaches of the mortgage
agreement and require tenants to be
switched to proper assured shorthold
tenancy agreements.”
Last week Residential Property
Solutions launched an ethical rentback
charter to raise standards in
the sector and clamp down on rogue
operators.
It argues that home owners should
be informed from
the start what regulatory
permissions
firms have to run
rent-back schemes,
and that they should
have the option of
receiving free legal
advice.
The charter also
calls for justifiable
fees and charges, a
legally binding ten-
ancy agreement for up to five years
and the option to buy back property
within that time.
Peter Beaumont, chief executive
of RPS, says: “This is a market which
has come of age and professional
operators must be prepared to raise
their game to a level which exceeds
the proposed regulatory minimum.”
Regulator spent £36m on enforcement in 2008/09
The Financial Services Authority
footed an enforcement bill of £35.8m
during 2008/09.
The regulator took in more than
£28m in penalties, up from £4.5m the
previous year, according to its ann -
ual report.
The enforcement bill includes the
cost of external accountants and
lawyers, which was £3.8m in 2008/09
compared with £0.9m the year before.
The money it receives from penalties
will be used to cut the amounts
payable by relevant fee blocks in
future years.
The report also shows the FSA
fined or prohibited 22 mortgage bro-
APPOINTMENTS
kers for fraudulent activity, rising
from 11 the previous year, and in -
creased its supervisory staff over the
period from 526 to 703.
It also prohibited a record 58 individuals
from carrying out regulated
activities compared with 30 the year
before.
The total number of regulated
firms fell by 3% from 28,325 to 27,340.
The FSA’s net costs for the year,
excluding those associated with outcomes-focussed
regulation and scope
changes, were £335m – £3.4m less
than the revised budget.
FSA chairman Lord Adair Turner
received a salary of £219,000, with
chief executive Hector Sants taking
home £478,000 and declining a bonus
of £130,000.
The accounts also reveal that former
deputy chairman Sir James
Crosby pocketed £63,250 while nonexecutive
director Professor David
Miles took home £28,000.
Mike Fitzgerald, sales director at
Brentchase Financial Services, says
he is pleased to see the FSA spending
so much on enforcement action.
He says: “The regulator may spend
months working on an enforcement
case which results in only a small
fine, but the message that sends to
rogue brokers is priceless.”
Tony Batchelder joins Knight Frank Finance
Tony Batchelder, former senior BDM
at Halifax Intermediaries, has joined
Knight Frank Finance as business
planning manager.
Batchelder spent some 39 years
working at Halifax.
Simon Gammon, managing partner
at Knight Frank Finance, says:
“We are thrilled to have someone of
Batchelder’s experience and reputation
join our growing team. He will
help us develop our business plan
and strategies in the next few years.
“Knight Frank Finance has been
establishing itself as the number one
brokerage for high value mortgages
PETERBEAUMONT
SECTOR MUST
UP ITS GAME
and Batchelder’s appointment will
help us greatly in dealing with the
top end of the high street lending
community.”
He adds: “Batchelder’s huge likeability
will also be of benefit in enhancing
our relationship with parent
Knight Frank.”
TECHNOLOGY
IntelliFlo unveils
whole-of-market
sourcing system
The 6,000 users of IntelliFlo’s pointof-sale
system Intelligent Office now
have access to whole-of-market mortgage
sourcing via a system developed
with DPR Consulting.
DPR is the provider of the Mortgage
Bench sourcing platform.
Surrey-based IT firm IntelliFlo is
well established in the IFA market
and its system already links with a
number of rival mortgage sourcing
systems.
But it felt it could provide a faster
and more accurate system.
Features include true cost calculations
that are claimed to be delivered
in seconds and the ability to save
multiple quotes. Brokers can also
apply scenario-based comparisons
such as the benefit of paying off
credit commitments.
The firm says around 2,000 of its
Intelligent Office users have confirmed
they will use the new sourcing
platform.
Dave Patel, managing director of
DPR, says: “Together we have developed
a tool that will relieve advisers
of time-consuming administration
and allow them to focus on developing
their businesses.”
Nick Eatock, chief executive of
IntelliFlo, says: “We were determined
to bring an efficient mortgage sourcing
tool to the marketplace that features
a range of time and cost-saving
enhancements.”
CLAIMS MANAGEMENT
ASA bans claims
firm text message
Claim Management UK has become
the second claims management firm
in a week to have a complaint against
it upheld by the Advertising Standards
Authority.
The firm sent a text message to
consumers stating that “due to government
legislation you can now get
your debt wiped out”.
The ASA concluded that the text
was unconditional and did not feature
appropriate qualifications.
It also found that the firm was not
able to show complainants had consented
to receive the message and
concluded it must not appear again.
MORTGAGE STRATEGY June 29, 2009
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