The Land Registry should be commended for working to bring the first digital mortgage deed to fruition
Kevin Tunnicliffe is managing director at SortRefer
Congratulations are in order to the Coventry Building Society - being the first lender to enter the first digital mortgage deed with the Land Registry on behalf of customers. The Land Registry is also to be commended for working to bring this enhancement to fruition.
Make no mistake, it is a significant step towards making the conveyancing process faster for all parties involved. The service allows borrowers to sign their deed online, without having to arrange for a physical witness to the signing and, because the deed is no longer subject to the UK postal system, it cannot be delayed or lost. I am sure there are many brokers out there who have been told that deeds have not been received?!
Of course, it only accounts for remortgages at present, but the Land Registry is looking forward to rolling out its ‘Sign Your Mortgage Deed’ service nationally and extending the service to purchases.
Significantly, much emphasis has been put on the security aspect. In the wake of a number of fraud cases, where deposit funds have been diverted into criminals’ accounts rather than into the conveyancer account dealing with the legals, the government and Land Registry are using GOV.UK Verify to enable borrowers to securely verify their identity before digitally signing their mortgage deed online.
As one of the pioneers of bringing an online conveyancing service to the broker market, we at SortRefer are delighted to see the new service going live and having read the Land Registry’s ambitious plan for a rolling series of constant improvements, I believe they will live up to their mission statement ‘to become the world’s leading land registry for speed, simplicity and an open approach to data.’
It is good to see a government department demonstrating that it can deliver on its promises. It also shows what can happen when a collaborative approach is adopted. Again, the Land Registry is to be commended for the way it has reached out to lenders like the Coventry and other providers to help build the architecture that is going to provide the whole house buying and mortgage market with a more streamlined, faster and user friendly service.
Broker referral fees
It had to happen and I don’t think anyone outside the estate agency sector will shed any tears to see that estate agents are going to have to be qualified and also declare to customers how much they are earning from referring customers to conveyancers, surveyors and mortgage brokers.
It has taken time, but whilst the financial services industry has all of its advisers and customer facing personnel as qualified individuals for some time, estate agency has been the consistent holdout against adopting higher professional standards. Now the government has acted and, provided there are no last minute U turns, the estate agency sector will be forced to adapt to meet the new rules.
Perhaps more significant than qualifications is the move to ensure that customers are informed of the fees estate agents receive for referring customers to a particular third party service provider, like a mortgage broker or conveyancer.
There have been many stories of customers being pressured into accepting their estate agent’s recommendation of mortgage broker. Often, potential buyers would be told they would not be taken seriously unless they elected to use the preferred broker. I think there will be plenty of delighted mortgage brokers who have had long term customers inform them that their services will not be required for fear of losing the property upon which they have set their hearts.
The issue is not the act of referral, which is fine. It is the consistent lack of transparency over the financial inducements paid to ensure those referrals. However, let’s not forget that it is not just estate agents who should be in the firing line. While most mortgage brokers ensure that their customers know exactly what fees they are receiving from service providers, such as conveyancers for referrals, there are those who still look to maximise their fee income at the expense of service.
Those brokers who already tell their clients about the referral fees they’re earning shouldn’t have any issues, but this move might have an impact on those ‘greedier’ brokers who take the highest commissions they can get regardless of the level of service or extra cost to their customers. At SortRefer, the customer always knows how much of a referral fee is paid to the introducing broker, because it is all in the quote along with a full breakdown of all the charges.
The fees paid to any party for referring business are a part of the fabric of the industry. Payment of procuration fees are, of course, well documented and in the main that also goes for any other fee that an adviser receives. What I think we need to remember is that customers need to be made aware, not just of the fee itself, but also whether the fee represents the best value in relation to the market it serves.
