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Letters | 7
advisers, especially mortgage advisers from the
SRB proposed rules, is the more structured
requirements needed to evidence and take
clear responsibility for demonstrating
affordability to clients and lenders. This along
Your say
with the appropriateness section make it a
must read for advisers, as this will be I believe
the way it will have to be especially when
mortgage advising.
Question: Reading the trade press recently I
have noticed more and more comments about No to buy-to-let regulation This was not a young, naïve, newly-wed cou-
‘down valuations’ and my firm has certainly ple who needed protection from the big bad
noticed too many of them. Is this a sign of Dear Editor world. This was a businessman, and he needed to
further market deteriation or valuers being I write in agreement with the recent comments be treated as such. He needed to raise money
frightened? by Adam Tyler of the NACFB. Indeed as a 45 quickly to deal with the problem, on his terms, to
year-old who has enjoyed a rewarding career in his timeframe. He was charged accordingly and
Answer: As I know you appreciate, this is an lending all my adult life, I feel qualified to go everyone gained from the transaction. In the
extremely difficult area for the valuers much further. Regulation can and should only same way a developer borrowing for profit does
themselves and for much more informed apply to consumers and to their home and noth- not need regulation causing additional expense
commentators than me who have vast ing else. Anything else is business and for com- and hindrance. He needs to establish the cost of
databases to call upon. While stating the mercial purposes, and borrowing should not be the borrowing, establish the exit route and take
obvious, that they are inevitable in the sort of entered into unless you are sure you know what his chance of a good profit – unless of course he
market we have and still are experiencing the you are doing and the possible outcomes. It wants a joint venture, in which case the lender
fact that there is more discussion about values, would take nothing at all to create a set of statu- takes the good with the bad along with him.
I personally believe this is a positive sign that tory bullet points that the borrower’s solicitor What he cannot have is both!
values generally are beginning to bottom out should read out and satisfy themselves that the Anyone who borrows for buy-to-let, or any
and rise in certain areas but there is still overall borrower understands the risks. commercial purpose, needs to take professional
uncertainty. It is this uncertainty that has in As an industry, we should stop pandering to advice to get the best deal on offer given their cir-
previous similar situations been the catalyst for those who think that everyone but the borrower cumstances, which in conjunction with their
a stabilised and consistent market. Nothing should take responsibility for the problems that solicitor they either accept or reject based upon a
can be guaranteed - one swallow doesn’t make they get themselves into. If, as a borrower, you commercial business decision.
a summer - but the signs I think are play big boys’ games for potential profit then you This government has already started to crimi-
encouraging. need to accept that it is a two way street and have nalise all of us as a method of controlling the
to shoulder your own responsibility if things go minority of offenders. You are no longer warned
Question: We are a small mortgage and wrong. If you bet on black in a casino and the or reminded but instead you are fined, heavily
general insurance broking firm, struggling to winning number is red then you do not ask for a penalised and sometimes criminalised. The pub-
survive week to week. We have in the past sold refund! If you had no idea you could lose then lic are no longer treated as intelligent adults and
a few mortgage payment protection policies to, you should have read the rules to begin with. there is almost no room for discretion. This non-
we believe, appropriate clients. Given the We have already seen how the public has sense must not be allowed to spill over into com-
announcements made by the FSA relating to learned to manipulate regulation to their advan- merce and in particular the entrepreneurial spirit
PPI/MPPI over the last two weeks and the tage with the explosion of compensation compa- that keeps lending alive.
costly reviews involved, what should we do? nies chasing claims for them, often based on pure Subject to certain safeguards, the unregulated
We can’t afford large fees or compensation technicalities. It’s not about justice, it’s about industry must remain unregulated and be
payments. dodging debt, so let’s not insult the intelligence allowed to make up bespoke rules to suit both
of the reader by pretending otherwise. Can you lender and borrower. This will allow profitable
Answer: The sensible thing for you to do is to imagine this with buy-to-let? Every time a ten- but sometimes risky, unusual and often plain
review the client files involved and reassure ant did a moonlight flit the borrower would be balmy transactions to take place (the latter can
yourself that the sales were appropriate. From looking for a loophole to avoid the mortgage often be the most profitable).
your comments you say you have had no payments because the lender used the wrong Lending to some of the colourful, exciting and
complaints from the clients involved which is type of font in the loan agreement. The world ‘plain clever’ characters that our introducers
of course a good sign. Get your compliance has gone mad! bring to us is the reason why I get up in the
person to look at the cases objectively again Commercial lending is bespoke, and is often morning. I can also say that provided lenders and
and hopefully you will be reassured - although arranged to fit a client’s circumstances. Recently advisers know what they are doing, and guide
at least, in a worst case scenario, if there are we lent a client £60,000 to settle a tax bill secured their borrowers carefully, there are very few casu-
any issues you can prepare for them. against a BTL investment property. The tax man alties indeed.
in turn owed them nearly £100,000 but they
would not make the refund until the liability had
been paid first (only in England, eh?). Without Anthony Wall, MD
You can contact Bill with your regulatory
our loan the client would have faced bankruptcy. Anthony & Co Financiers, Private Lending
questions by emailing:
His otherwise healthy business was on the brink
bill@billwarrencompliance.co.uk
of closure because the impending action had
triggered the bank overdraft to be called in. Can
If you want to reply to any of these issues or
Bill Warren is Managing Director of Bill Warren
you imagine trying to create a KFI for circum-
create issues of your own then email me at:
Compliance LLP
nia@thepublishinggroup.co.uk
stances such as these? It’s complete nonsense!
www.mortgageintroducer.com November 2009 Mortgage Introducer
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