Who is Treating who Unfairly?

Posted on 3 November 2007 by Ray Boulger

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Mortgage Introducer reported that speaking at the Mortgage Next Conference, Peter Charge, director of national accounts at edeus, said: "When the market is booming, fast-track is a great product. But in the flight to quality, fast-track must be watertight as you need to expect more lenders to come back for more information. But if you are not matching the right product, you are leaving a footprint on the client’s record and the regulator could pull you up on ‘Treating Customers Fairly."

It is obviously in the interests of lenders who are in the self cert market but either not in the mainstream market or not strong in it to talk down fastrack. However, suggesting that the FSA could pull a broker up for not obtaining a more expensive mortgage for the client than the one actually secured is rather fanciful.

The rationale for the suggestion that if a fastrack mainstream application failed the client would have an unnecessary footprint on their credit file simply highlights the cavalier non compliant approach of many lenders to the FSA’s requirement that lenders should not inhibit a borrower’s ability to shop around. Although on sub prime applications some lenders take little notice of footprints most do for mainstream applications. Despite the credit reference agencies offering the option to do a quotation search, which does not leave a hard footprint, most lenders leave a hard footprint even when the broker or client merely requests a decision in principle (DIP).

If a submission for a DIP is made, rather than a full mortgage application, the lender should not prejudice the applicant’s credit status by recording a hard footprint. That should only happen when an application is confirmed, not when just applying for a DIP. Three years after the start of statutory mortgage regulation is more than enough time for lenders to stop treating borrowers unfairly in this way. The CML has looked at this problem but so far failed to come up with a solution. It is about time the FSA started to get tough with those lenders who are still breeching their TCF requirements in this way.

 

Category: Mortgages, Regulation

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