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problematic for various reasons but one among several reasons the new system is better, is that if the application is rejected it tells you why. For example, it will say ‘credit score failed’. Most lenders have hidden behind data protection laws and have refused to give even this much information on why an application had failed. But it’s immensely useful to brokers because it allows you to understand where to take the borrower next.”
Boulger says he is unaware of any other lender that offers written reasons in this way, though he did say that some lenders will discuss applications which have been declined over the phone, depending on the relationship a broker has with that lender.
Coogan is of the same opinion, underling the growing importance of real relationships between lenders and intermediaries. “In the future it will come down to the lender’s relationship with intermediaries, some may be considered better partners than others,” he says. “With over 100 lenders and 30,000 intermediaries in the market, for many it was a remote arms-length relationship three or four years ago. Lenders were grateful to get the business in through the door but there was little in the way of broker vetting and there was little in the way of a day-to-day relationship in a face-to-face sense. It wasn’t a partnership relationship. “That has pros and cons, it helped
Clear lending decisions. Isn’t it better when you know where you are?
lenders access the whole of the market but it meant that they had less control and some had more willingness than others to delegate to packagers and networks. Now we’ve reached a point where there are many fewer intermediaries and there are many fewer active lenders in the market ready with products.”
The implication is that this change in dynamic has altered the face of lender broker relations, and made face-to-face business relationships much more important. It’s the old adage, “it’s not what you know, it’s who you know.” Divided we fall, united, how do we compete? Another area which requires further
co-ordination from all parts of the mortgage industry is the area of fraud. Historically, it has been the fraudsters who have worked together, with rogue solicitors, valuers and advisers co- operating to infl ate borrowers’ incomes and asset values. Indeed, the FSA’s annual report published in mid June showed that lenders have reported 700 instances of suspected broker fraud under the Information From Lenders scheme over the past four years.
Angus Stewart, chief executive of fraud and risk management specialist e-solutions, says there is an unspoken tendency for lenders to sweep fraud under the carpet and reluctance to admit publically the extent to which they have been affected.
Coogan’s response is: “No-one likes washing their dirty linen in public, but privately lenders will be in discussions with the FSA when they have problems.” But Stewart is adamant on the role of information sharing and working together to help mitigate fraud better. He said: “It boils down to how organisations can make best use of the information they have available and if they don’t have information, what can be done to improve the data they have access to.
“Often lenders have fairly old systems, which can be hard to extract data from. In many cases of fraud, one lender will pick up a problem while another lender will miss it. Credit reference agencies help against this issue and have worked relatively well to protect lenders but it remains a problem, particularly when lenders may sweep fraud under the carpet.” Stewart believes that in principle, most institutions are prepared to share data because it’s in the broader interests of the industry, but he highlights a key hurdle: which information do lenders share to help protect the industry from fraud and which do they keep to themselves in the interest of competition?
“At the moment we have a sub- optimal situation. The way to detect fraud is to join the dots in behaviour – we look for inappropriate or unusual patterns of behaviour among members of staff. The problem is, at the moment,
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If you do not have professional experience you should not rely on the information contained in this communication. If you are a professional and you do reproduce any part of the information contained in this communication, to be used with or to advise private clients, you must ensure it conforms to the Financial Services Authority’s advising and selling rules. Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ.
30 mortgAge introducer JULY 2010
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