Dear editor,
In response to Dan Raywood’s two articles on estate agents selling mortgages (MI, 28 April 2007), I would like to make a couple of observations.
It is difficult to have a sympathetic view when someone writes anonymously. I have re-read the initial article and it clearly states the clients were out viewing properties which, to my way of thinking, means they had not sorted out the mortgage other than had it agreed in principle at best.
The misconception I am responding to is that the broker feels that regulating the estate agents will solve his problem. The key issue is that the consultant who ultimately speaks to the client is already regulated and under ‘Treating Customers Fairly’ will either offer a better deal or tell the client otherwise. The fact that the client ultimately saw the estate agent’s broker suggests there are two sides to the story. When clients deal with more than one broker, they invariably say what each want to hear to avoid conflict.
We work in a competitive market – at Linear we place our consultants in independent estate agents, and presently cover 163. I’m not aware of any that berate clients to see us – in fact it’s a challenge to get them to offer our services on a consistent basis. So to believe someone rang an applicant four times for no other reason than to push a mortgage is a stretch to say the least.
It is, however, vital that all purchasers are qualified at offer stage as, before anyone forgets, the estate agent’s client is the vendor and they have a duty to make sure the purchaser has the financial means to purchase the property. For that fact alone is why every estate agent should have a working relationship with a mortgage broker perhaps Mr Anonymous could offer his services.
Mark Graves
Managing director
Linear
Further changes afoot?
Dear editor,
Fashions change, which is fortunate given some of the ties I’ve still got lurking in the back of my wardrobe.
For financial services consumers, however, the most important changing fashion has perhaps been that around the principle of caveat emptor and the degree of responsibility they have for their purchases.
This has been a tough nut for the Financial Services Authority (FSA) to crack and it has evolved its regulatory style to establish a regime that meets the risks faced by consumers, without stifling the innovation that naturally exists in the markets.
The issue has come to the fore again recently for a number of reasons. The FSA has set out its intention to move to a more principles-based environment and has made it clear that firms will be responsible for giving consumers all the information they need to make an informed decision on any particular purchase.
There is also an ongoing drive to educate consumers and ensure they are capable of making those decisions effectively. Speaking recently, FSA supremo John Tiner, said: “Increasingly consumers will be educated to take responsibility for their own actions and while the FSA does not want to lessen the protection it affords them, it is aware of the role they can play to protect themselves.”
However, the FSA has also expressed concern over the way firms give consumers the information they need. No longer will it be possible for them to put everything into the mountains of documentation they send out, at the expense of explaining things verbally.
This practise is something consumer champion Which? is worried about and it recently highlighted the problems faced by policy holders of travel and protection insurance who regularly find they are not covered when they come to make a claim.
The details of their policy may have been explained in the small print, but too many simply assume that paying for the policy grants them cover in every eventuality. Unless potholes are flagged up in technicolour at the point-of-sale, many consumers blindly drive straight into them when they try to make a claim.
The challenge across the insurance sector therefore remains to provide a sufficient level of information in a suitably digestible form to the buying public. This will enable a balance to be reached over what can reasonably be expected from both parties when it comes to buying and selling policies.
The problem for the FSA will be in deciding where to draw the line when it comes to assessing complaints and whether providers or consumers must bear ultimate responsibility.
Clearly it is difficult for a consumer to plead ignorance and claim they were unaware of a warranty policy, for example, when it has been showing up on their bank statement for the past 24 months.
Similarly, where absolutely no mention has been made orally or in written communication of the exclusions a policy may carry, providers may find it hard to defend their decision to turn down a claim.
However, how the FSA deals with the incidents, which fall between these two pillars, will be interesting to watch. As it pushes the pendulum of caveat emptor back towards consumers, it must be mindful of the problems it will create if it goes too far.
Indeed, given the problems the market has had in reaching a happy medium between the responsibilities of buyers and sellers in the past, one wonders how long it will be before fashions change again and the FSA seeks to regulate the products sold, rather than the outcomes achieved. Stranger things have happened.
Simon Lance Burgess
Managing director
British Insurance Limited
Raising eyebrows
Dear editor,
The worries which the anonymous broker in last week’s issue had over self-cert mortgages were a nice read but they must have raised a few eyebrows.
First of all, I enjoyed the fact that a dinner lady could use such a fanciful title as ‘catering consultant’. Anyone who hands out cold, lumpy custard and mashed potato which looks and tastes like sawdust is clearly not ‘consulting’ their target audience – as you can probably tell, I was a big fan of school dinners in
my youth.
However, the best bit about the broker’s claims was that 90 per cent of his self-cert cases were not really valid for the product. We all know that there occasionally needs to be a little bit of, for lack of a better word, ‘creativity’ to get the client over the line, especially if it is blatantly obvious that they will be able to afford it. But 90 per cent? That seems to me an extraordinary amount and I would question that broker’s hypocrisy for complaining about the fraud going on when it is brokers like him who are leading it.
Self-cert is there for a very good reason and as responsible brokers, we should only be using it when it is appropriate.
Name and address supplied
AHIPP alarm
Dear editor,
In response to the Merit findings criticised by the Association of Home Information Pack Providers (AHIPP).
As usual, the people who cannot do jump on any regulation bandwagon as a way to make money out of others’ hard work. AHIPP will complain until we cannot do anything without extra cost – most of which will go into its pockets. The whole process will put people off selling and I’m certain AHIPP, solicitors and surveyors will be rubbing their hands with glee at the money being diverted into their pockets because of all the new rules.
Insurance and double-glazing salesmen were the most despised careers in the past. It appears now that solicitors, estate agents, surveyors and regulators now have that distinction
Tony R Watson
Via email
Self-interest?
Dear editor,
In response to ‘AHIPP moves to dispel HIP ‘lies and myths’’
9 May, 2007).
Soothing words from AHIPP. Rampant self-interest appears to be at work here, from a group entirely dependant on this ridiculous piece of legislation. These comments are totally worthless.
Via e-mail
