4
NEWS
EXCLUSIVE
65% of cases shoddily
packaged, says Abbey
● NATALIE MARTIN
Abbey has blamed shoddily packaged
mortgage cases for delays in its
processing and says that at one point
65% of applications from brokers
were not up to scratch.
Clive Kornitzer, chief operating
officer at Abbey for Intermediaries,
estimates that around 45% of the
applications the lender is currently
receiving are not fully packaged but
says it has seen this figure climb as
high as 65%.
He says: “This is causing a problem
for us in that it is delaying the
application process for all mortgage
cases.”
Kornitzer says a solution can be
found if both sides work together.
He adds: “From a lender’s point
of view, we need to ensure brokers
are kept aware of the information
required to process clean applications
while keeping our online calculators
as closely aligned to our
lending criteria as possible.
“From a broker’s perspective, they
must ensure their applications are
COMMISSION
The Association of Mortgage Intermediaries
says it would welcome a
debate on whether brokers charging
for advice instead of receiving proc
fees would be feasible.
Dan Waters, director of retail policy
and conduct risk at the Financial
Services Authority, revealed at the
FSA’s mortgage conference last
week that it is considering moving
elements of the Retail Distribution
Review into the mortgage market to
eliminate product bias.
Waters says: “The RDR aims to
reduce conflicts of interest in remuneration
practices in the investment
market. The proposal we have put
forward and expect to consult on is
adviser charging, which ends the setting
of commission levels by pro -
viders and is intended to deliver a
knock-out blow to product bias.
“We must consider whether such
fully packaged and
all required documentation
is with
us in the first
instance.”
The lender says
many brokers fail
to adequately complete
initial application
forms, let
alone package the
other documents required for clean
applications.
Kornitzer says: “Taking more time
to package applications would not
only give customers a better chance
of success but also speed up the
process because we would not need
to keep asking for more information
and for cases to be resubmitted.
“The benefits of working together
to improve the quality of applications
should include quicker processing
times and hopefully better
service for brokers.”
David Hollingworth, mortgage
specialist at London & Country, says
a structural intervention in the mortgage
market could deliver similar
benefits to consumers.”
Robert Sinclair, director at the
AMI, says it does not make sense in
all cases that brokers should be paid
high commissions for advising on
sub-prime deals, especially when
the amount of work involved is often
not much more than sourcing prime
mortgages.
He says: “At the moment we have
a blank sheet of paper. There is no
question that there will be a broker
market in the future but we need to
discuss how it will operate.”
AMI revealed last week that it is
looking to recruit a policy analyst
and its sister trade body, the Association
of Independent Financial Advisers,
is also looking to take on two
senior figures.
AIFA is looking for a marketing
brokers are sometimes too quick to
criticise lenders and complain about
their service.
He says: “I think Abbey is trying
to convey the message that brokers
can do something to help themselves.
If it provides as much up-to-date
information as possible and brokers
take the time to fill in applications
properly it will help everyone.
“The challenge for us all is to keep
on top of product changes, but Abbey
has said that brokers have the ability
to influence the situation and ultimately
help consumers.”
But Jonathan Burridge, managing
director of Quantum Money, says
many brokers have been frustrated
with the lack of consistency Abbey
has shown towards them.
He says: “In Abbey’s case you reap
what you sow. It has promised that
it will improve the way it updates
brokers and I think once it has done
this it will start to see a significant
improvement in the quality of cases
it receives.”
AMI open-minded on broker fees
● NATALIE MARTIN
LENDERS
CLIVE KORNITZER
TAKE TIME TO
PREPARE CASES
ROBERT SINCLAIR
WE HAVE A BLANK
SHEET OF PAPER
executive to look
after events and
key accounts.
It is also seeking
a director of
public affairs who
will work with the
senior management
team in de -
livering public aff -
airs strategies.
Sinclair says:
“The economy and the financial
services industry are going to see
some important changes in the next
12 months. This is bound to result in
issues that affect our industry and
how it is regulated, and we are committed
to playing a key role during
this time.”
He says the association has budgeted
for the new recruits and will
be able to afford the additional cost.
www.mortgagestrategy.co.uk
LENDERS
Yorkshire boss
calls for FSA
to probe pricing
● NATALIE MARTIN
Iain Cornish, chief executive of the
Yorkshire, is calling on the Financial
Services Authority to look into how
lenders price for risk.
Cornish says that in the past large
lenders have underpriced for risk
which has resulted in smaller lenders
and societies being forced to diversify
into risky areas because they
could not make enough money from
prime mortgages.
The FSA will publish a discussion
paper in September on the future
shape of mortgage regulation and as
part of this it is considering a cap on
LTVs. Cornish says he would like to
see this extended to look at pricing.
He says: “I would like to see the
FSA have a discussion about pricing
instead of just saying it is not a product
regulator. In the past five years
large lenders have
not always priced
their products to
reflect the risks
involved.
“Many lenders
had to diversify
be cause they could
not make enough
money from prime
mortgages and
IAIN CORNISH
REVIEW CAPITAL
REQUIREMENTS
this resulted in the downfall of
some.”
Cornish would like to see the FSA
make lenders hold a certain amount
of money under capital adequacy
requirements, making underpricing
less attractive.
He says: “I’m all for innovation in
the mortgage market but I think the
regulator needs to look at pricing in
some way.”
But Alan Cleary, managing director
of Exact, says the FSA should not
regulate pricing or products but in -
stead focus on firms’ exposure to
risk, rooting out companies that
don’t stick to the rules.
Cleary says: “This is not 1970s Russia
– this is a capital market based
on supply and demand and the survival
of the fittest.
“The FSA should not get involved
in pricing or anything to do with
product design.”
He adds: “The regulator should
look at firms’ exposure to risk and
come down hard on those that break
the rules, so it stops others following
suit.”
MORTGAGE STRATEGY May 18, 2009
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