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by Alan Cleary, managing director, Precise Mortgages
One of the significant changes that has occurred over the last three years is lenders’ motivation to have more control over relationships that are key to the mortgage chain. As we all know lenders absorbed a lot of losses in the downturn and coupled with reduced levels of liquidity available today they need to do everything in their power to avoid future losses. One such relationship that has arguably suffered is that between lenders and solicitors. Lenders rely on solicitors to register their legal charge on the property that they are lending money against, as well as moving money up and down the mortgage chain.
Some of the losses incurred can be
directly attributable to fraud and in many instances this was facilitated by solicitors, valuers, brokers and borrowers all working in collusion to the detriment of the lender. As a result many lenders will have instigated policies and procedures that
Alex Hammond, brand manager at Kensington, says fraud is a major concern but there are other ways to limit risk. “It’s really about making sure you as a lender are protected and that your customers are protected,” he says. “I think with any partnership the onus is strongly on managing the oversight and relationship very carefully.” In the past reacting to this market move might have taken rather longer, but the CML is working hard in this area as a direct response to lender concern. After working with the CML last year, the Law Society announced the Conveyancing Quality Scheme which offers annually renewable accreditation to solicitors who pass the assessment. It expects the first firm to secure
break down this chain making it much more difficult for this type of fraud to take place. We have seen some lenders significantly reduce the number of solicitor firms on their panels as well as restrictions on who can instruct valuations and to which company. There has also been an increase in the due diligence lenders carry out on brokers, networks and mortgage clubs resulting in an increasing number of brokers effectively being struck off. It is paramount that lenders have confidence in these relationships and that if something goes wrong they will be appropriately compensated. Therefore we are seeing a flight to
perceived quality and I believe this will continue across the industry throughout 2011/12. The reason I say “perceived” flight to quality is that many smaller solicitor firms that have been diligently servicing the lending community and their borrowers for many years are being caught up in the cull and this in my opinion is not a good outcome. However, until the Law Society and/ or the Solicitors Regulation Authority can come up with a way of dealing with these issues I fear that many local solicitors will be frozen out of the process.
accreditation in early February. “The CQS will make it possible for lenders to know they are dealing with high quality solicitors at minimal cost and difficulty to themselves,” says Law Society president, Linda Lee. It’s part of ongoing collaboration which some in the industry say has more to do to address the issue of fraud.
you sCratCH my baCK Working together doesn’t just relate to market wide relationships and lender broker dialogue. For brokers, a growing trend in the market place is emerging on commission sharing and referrals. It’s two-fold. Rather than trying to be a jack of all trades, intermediaries are
30 mortgage introducer FEBRUARY 2011
“WORKING TOGETHER DOESN’T JUST RELATE TO MARKET WIDE RELATIONSHIPS AND LENDER BROKER DIALOGUE.”
working out what they’re good at and then referring specialist business to the experts. The success of this strategy is a result of advisers thinking more broadly about the customer. Business is moving away from the transactional and towards a holistic advice approach – something that improves broker incomes but crucially, is better for consumers.
John Malone, executive chairman of PMS, says this approach has been the way he’s done business throughout his career.
“Everyone in business has a strength and also has weaknesses,” he says. “You can’t be wonderful at everything especially when giving complex advice to a variety of clients. Even within PMS there are times when it’s best to outsource business to experts we feel are better able to give advice to the intermediary dealing directly with the client.”
For PMS, this outsourcing results in
relationships that benefit specialist brokers including Mortgages for Business in the buy-to-let arena, Mortgage Centre IFA for commercial business and
Largemortgageloans.com for the high value mortgage market. More and more of these deals are springing up not just across the mortgage market but also linking mortgage brokers to wealth management and estate agency. Former Home of Choice director of estate agency, Frank Lowe, is working to link top end independent estate agents with
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