Debate at the recent Mortgage Compliance Forum saw members question how far intermediaries needed to go when breaking down a client’s monthly outgoings, especially on remortgage cases.
Jonathan Cornell, managing director of Hamptons International, remarked: “How thorough should you be with budgeting? You need to do a very thorough factfind which includes utility bills, travel, etc, and brokers have a duty to explain to clients why they need to know all this information.”
But Nick Battersby, compliance director at the Regulatory Alliance of Mortgage Packagers (RAMP), commented: “With strict budgeting rules, you end up with remortgage clients who are servicing the debt well having to go through a long budget check. The broker knows the customer and they can handle the repayments. What is needed is a common sense approach.”
It was highlighted that the Financial Services Authority’s move towards more principles-based regulation should be helping brokers take a more common sense approach in all areas of the process.
However, Neil Walkling, head of compliance services at Sesame, noted that the opposite was happening when it came to budgeting.
He said: “With principles-based regulation, you get more detailed practice guidelines but you end up with less movement and you are always conscious that the FSA can challenge you.
"However, you are getting to the stage where a lot of brokers don’t feel comfortable going through a very detailed budget as they find it embarrassing. But they just need to explain to the customer that they have a job to do.”
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