Morgage Advisors/Brokers - how bad are they ?

GeorgeHowell

GMS wrote: »

Which lender was selected and why do you believe it to have been unsuitable? Some lenders have restricted solicitor panels so this may explain the distance for the solicitor firm. There are also massive comapnies offering conveyancing for competitive prices with lender cashbacks coveringthe bill. This could also possibly explain why the distance was in place. Without knowing the details it would be impossible to say. Equally it could be a firm who pay the adviser a referral fee.

The basic mortgage qualification is CeMAP (Certificate in Mortgage Advice and Practice). Once the qualification is obtained then mortgage advice can be given assuming the adviser is registered to do so. CPD is a huge part of the adviser's requirements now so the need to demonstrate current knowledge and understanding is ongoing.

The independent part is something I cannot comment on. As has been said this relates to fees so your relative needs to refer to the Initial Disclosure Document to see what the fee structure was. If it was wrong then a complaint should be made.

You mention bad advice due to one parameter. What was this?

Also how can you be 100% certain your relative has told you the full story? I am not suggesting they haven't but for instance there may be a CCJ or default in place which they are not too keen to reveal to a family member. Something like this could lead to a third party thinking poor advice has been given when infact it was not. Mortgages are not a 'one size fits all' product. Just because somebody has a 3% rate for instance does not mean another person will get it.

I am not the mortgagor so I don't have all the facts. And no I can't be certain that the relative concerned has provided a complete full and frank disclosure. But considering all the facts that I do have at my disposal, plus some degree of intelligent reading between the lines, plus sidebar discussions with other family members I'm as sure as I can be that this mortgage advisor is a crock. I'm pretty sure there's no CCJ or default. It might be more to do with trying to protect the advisor, who as I said has a personal connection with one branch of the family, and also perhaps reluctance to draw attention to their own naivety.

I am not prepared to divulge who is the lender or other details because one does not know who reads these forums and I don't want to state anything that could possibly identify any of the parties involved. You might think that's evasive and indicative that my case is a therefore bit weak, but I'd rather run that risk than the risk of causing more problems in a real situation because of posting stuff on the internet.

Suffice to say that there is more to mortgage advice than finding a decent deal in terms of interest rate, loan to value, and loan period. It has never been more complex than nowadays with lenders trying to cover their tracks and operate all sorts of checks and balances, after their gross irresponsibility in the pre credit crunch period. So all sorts of additional issues can come into play about which I would expect mortgage advisors to know what various lenders' policies are, to know what the legal position and processes are, and to take account of the client's particular circumstances accordingly. If that's not considered to be part of their brief, which I suspect this one pretty much believes to be the case, then for my part they are about as useful as a chocolate teapot.

GMS

GeorgeHowell wrote: »

I am not the mortgagor so I don't have all the facts. And no I can't be certain that the relative concerned has provided a complete full and frank disclosure. But considering all the facts that I do have at my disposal, plus some degree of intelligent reading between the lines, plus sidebar discussions with other family members I'm as sure as I can be that this mortgage advisor is a crock.

I am not prepared to divulge who is the lender or other details because one does not know who reads these forums and I don't want to state anything that could possibly identify any of the parties involved. You might think that's evasive and indicative that my case is a therefore bit weak, but I'd rather run that risk than the risk of causing more problems in a real situation because of posting stuff on the internet.

Suffice to say that there is more to mortgage advice than finding a decent deal in terms of interest rate, loan to value, and loan period. It has never been more complex than nowadays with lenders trying to cover their tracks and operate all sorts of checks and balances, after their gross irresponsibility in the pre credit crunch period. So all sorts of additional issues can come into play about which I would expect mortgage advisors to know what various lenders' policies are, to know what the legal position and processes are, and to take account of the client's particular circumstances accordingly. If that's not considered to be part of their brief, which I suspect this one pretty much believes to be the case, then for my part they are about as useful as a chocolate teapot.

If you dont want to disclose then that is fair enough.

You need to read the Suitability Letter which should have been provided. This needs to explain the reason(s) why a particular lender was chosen.

Without knowing what the particular issues are it is impossible to say what has happened. A fact find should have been done which would give the adviser the circumstances of your family member which would then lead to a product being recommended.

Whatever the 'additional issues' are may well help to see if there has been bad advice or whether information was witheld from the adviser/lender.

It could be worth a chat with another broker to see if any better product may have been available. May be a cost involved but if it saves money it will pay for itself.

I assume the mortgage has not been offered, or if it has been offered it has not completed?

GeorgeHowell

GMS wrote: »

If you dont want to disclose then that is fair enough.

You need to read the Suitability Letter which should have been provided. This needs to explain the reason(s) why a particular lender was chosen.

Without knowing what the particular issues are it is impossible to say what has happened. A fact find should have been done which would give the adviser the circumstances of your family member which would then lead to a product being recommended.

Whatever the 'additional issues' are may well help to see if there has been bad advice or whether information was witheld from the adviser/lender.

It could be worth a chat with another broker to see if any better product may have been available. May be a cost involved but if it saves money it will pay for itself.

I assume the mortgage has not been offered, or if it has been offered it has not completed?

As I said I haven't seen any of the paperwork because I am only on the edge of it. I believe that this advisor is what is known in common parlance as something of a cowboy but has a reputation for 'making it happen'. Does that involve not always operating with 100% integrity ? You might think that, I couldn't possibly comment. I am very confident that the key salient facts and circumstances were made known by the client to the advisor from the outset. But at the very least the whole thing should have been properly checked out, there should have been total transparency with the client, and tracks should have been covered. Did that not all happen in this instance ? You might think that, I couldn't possibly comment. There were apparent omissions in knowledge and understanding of the lender's policies, which were freely available and unequivocally stated on the internet. Goodness knows I found it myself. However, it's not my place to intervene further, I don't want to queer the pitch of my relative. But maybe this advisor will take this cavalier approach carelessly once too often, someone will get their fingers burnt good and proper, and report them to the FSA. I do hope so.

dunstonh

GeorgeHowell wrote: »

As I said I haven't seen any of the paperwork because I am only on the edge of it. I believe that this advisor is what is known in common parlance as something of a cowboy but has a reputation for 'making it happen'. Does that involve not always operating with 100% integrity ? You might think that, I couldn't possibly comment. But at the very least the whole thing should be properly checked out, there should be total transparency with the client, and tracks should be covered. Did that not all happen in this instance ? You might think that, I couldn't possibly comment. It's not my place to intervene further, I don't want to queer the pitch of my relative. But maybe this advisor will take this cavalier approach carelessly once too often, someone will get their fingers burned good and proper, and report them to the FSA. I do hope so.

Before 2004, the role of the mortgage adviser was viewed by the public as someone who could get them a mortgage and know all the tricks on how to do it.

indeed, if you had an honest broker who told someone they cant get a mortgage and that person went to broker number 2 who fudged the paperwork, the consumer typically thought the honest broker was actually a bad broker. Lenders didnt care as in the credit boom, no-one did.

After 2004, when mortgage regulation came in, it should have put an end to that sort of thing as standards should have improved and also allow action taken against those less honest brokers.

I also have to agree with the comments higher up that sometimes you do not get the whole story from someone. I have had people that give a story that sounds like a nailed on complaint. Yet when they go on later to provide a bit more info or supply some paperwork about whatever it is, you then find out it isnt so much a complaint but a misunderstanding or poor memory recollection or just embellishing the story a bit to make it sound worse than it is. I had someone complain about me once. I apparently sold a product that was wrong for them. They were adamant it was me and they put in writing what I said to them and what I did wrong. Problem was they took the product out before I was an adviser and I was actually still at school at the time. I never found out if it was poor recollection or someone trying to present a story to make their case sound better as I was never involved so was never told.

GMS

GeorgeHowell wrote: »

As I said I haven't seen any of the paperwork because I am only on the edge of it. I believe that this advisor is what is known in common parlance as something of a cowboy but has a reputation for 'making it happen'. Does that involve not always operating with 100% integrity ? You might think that, I couldn't possibly comment. I am very confident that the key salient facts and circumstances were made known by the client to the advisor from the outset. But at the very least the whole thing should have been properly checked out, there should have been total transparency with the client, and tracks should have been covered. Did that not all happen in this instance ? You might think that, I couldn't possibly comment. There were apparent omissions in knowledge and understanding of the lender's policies, which were freely available and unequivocally stated on the internet. Goodness knows I found it myself. However, it's not my place to intervene further, I don't want to queer the pitch of my relative. But maybe this advisor will take this cavalier approach carelessly once too often, someone will get their fingers burnt good and proper, and report them to the FSA. I do hope so.

'Making it happen' has a multitude of meanings. Could be a broker doing a difficult case correctly which a client would struggle to do, or to the extreme it could mean fudging a case through. Without full details it would be impossible to say.

Assuming the broker has followed procedures correctly your relative should have an audit trail to follow. This is where the 'issue' needs to be addressed. If the problem was down to the broker then there could well be grounds for action. However, if the adviser has a signed fact find which proves what he did was correct and information had come to light against these details then your relative could find themselves on the wrong end of an investigation.

Obviously we have no details to go on but the paperwork should show the audit trail. If your relative has done no wrong then they should pursue it.

Not knowing lender policies could relate to any number of things. Could relate to a gifted deposit, a bit of adverse or length of employment. Could be a fast track case submitted without proof of income which was later requested and not provided as not there.

Has your relative obtained finance thus far? Have they considered an alternative broker and/or applying to lenders(s) direct with some help from you?

GeorgeHowell

dunstonh wrote: »

Before 2004, the role of the mortgage adviser was viewed by the public as someone who could get them a mortgage and know all the tricks on how to do it.

indeed, if you had an honest broker who told someone they cant get a mortgage and that person went to broker number 2 who fudged the paperwork, the consumer typically thought the honest broker was actually a bad broker. Lenders didnt care as in the credit boom, no-one did.

After 2004, when mortgage regulation came in, it should have put an end to that sort of thing as standards should have improved and also allow action taken against those less honest brokers.

I also have to agree with the comments higher up that sometimes you do not get the whole story from someone. I have had people that give a story that sounds like a nailed on complaint. Yet when they go on later to provide a bit more info or supply some paperwork about whatever it is, you then find out it isnt so much a complaint but a misunderstanding or poor memory recollection or just embellishing the story a bit to make it sound worse than it is. I had someone complain about me once. I apparently sold a product that was wrong for them. They were adamant it was me and they put in writing what I said to them and what I did wrong. Problem was they took the product out before I was an adviser and I was actually still at school at the time. I never found out if it was poor recollection or someone trying to present a story to make their case sound better as I was never involved so was never told.

I think we are definitely still in the pre 2004 era in this case. It looks as though the mortgage application will probably be accepted, and the mortgagor will probably think the advisor has overall done a good job for them. There is no formal complaint against the advisor, nor likely to be. The only complaint, per se, is from me, looking at how this character has operated, and the clear deficiencies compared with what various experts on this thread say should have happened.

From what I do read above it seems that those describing themselves as independents can still take commission from lenders. If it were me dealing with an advisor I would not have that, even if it cost me more. I would want to think that the advisor had nothing else to consider other than getting the best overall deal for me. I can't say for certain, but I suspect that commission is involved in this case, and that it has been the overriding priority for the advisor. That, coupled with lack of prowess on their part, and a degree of naivety and desperation to secure the property purchase on the part of the mortgagor, led to a screwed up situation which had to be rescued, no thanks to the advisor in terms of causation or solution.

Various comments and the lack of anyone posting a similar example or concern lead me to believe that such an instance is fairly unusual these days and that the considerable majority of advisors are indeed much better than this.

goobergirl

I have used 3 different IFA's in my short life and have used my current one for over 10 years now. The 1st guy i'm sure was fine but I just didn't 'gel' with him, the 2nd was an arrogant boor who thought he knew better but ended up finding me a BTL mortgage I could have found myself, panicked over the application (8+ phone calls in one day checking info. I had already provided and painting a very gloomy picture on my chances of success -wrong as it turned out), then charged me £250 for the 'privilege'.

My current advisor has consistently produced good results, understands what I am looking for / trying to achieve and is always honest. He takes all the stress out of any application etc and doesn't charge extortionate rates. I have not heard many complaints about him (apart from those who wouldn't take his advice / accept what he was trying to tell them) and he is always busy.

I guess it's like any profession, there's good and bad. If you aren't satisfied with him, it's probably best to go elsewhere.

GeorgeHowell

GMS wrote: »

The basic mortgage qualification is CeMAP (Certificate in Mortgage Advice and Practice). Once the qualification is obtained then mortgage advice can be given assuming the adviser is registered to do so. CPD is a huge part of the adviser's requirements now so the need to demonstrate current knowledge and understanding is ongoing.

This qualification is one of those where the exams are short, and comprise just multiple choice questions. Better then nothing in order to demonstrate a grasp of the basics, but I would lay a pound to a penny that the rather arcane details of the sort of issue that came up in the instance that I am describing would not be covered in the course and exams. Also I have been unable to find an unequivocal statement anywhere that mortgage advisors absolutely have to have this qualification in order to practice under FSA regulation. It may be the case, but I have been unable to find that confirmation. I wonder if there is another loophole whereby some can slip through the net -- maybe by successfully arguing in 2004 that they were 'qualified by experience' ? As I said before, if there's a loophole to be had anywhere I'm pretty sure this one will find it.

kingstreet

GeorgeHowell wrote: »

those describing themselves as independents can still take commission from lenders

Not the case. Whole market is the description for commission-only brokers who would not recommend a direct to lender non-commission paying product.

Independent is used for those offering advice on commission or non commission paying offers on a fee paying basis and where any commission earned is rebated to the borrower at completion.

kingstreet

Here's a comparison I did last week;-

https://forums.moneysavingexpert.com/discussion/comment/44595192#Comment_44595192

In some cases, using an independent broker may be preferable to a whole market adviser.

Whole market advisers may only select from lenders and products which pay them a commission, while an independent may agree a fee with you and pay to you any commission he receives. If a direct to lender product is better for you, the independent will tell you if that is better as you are paying a fee for the advice.

Here's an example.

You see a whole market broker looking for a 25 year repayment £150k mortgage on a £200k purchase. You want the best five year fix, regardless of fees. You agree the broker will take commission on any arranged mortgage.

He finds you an Accord Mortgages product at 4.44% fixed until 31/08/2016 at £828.65 per month. The broker will receive commission of £487.50.

You then see an independent broker who agrees to charge you a fee of £299 and to pay you any commission he receives on any arranged mortgage. He also looks at direct to lender deals and explains that in this case, you may get the best deal, but no commission rebate.

He finds you the Accord option, but as you have a fee agreement, he tells you the commission rebate would be £487.50, leaving you £188 better off.

The best overall deal is Yorkshire Building Society's 3.99% fix until 30/09/2016. The monthly payment is £790.93. This is a direct to lender product, so no commission rebate. You've paid a £299 fee, but in doing so, the monthly cost of your mortgage has fallen by £37.72 against the Accord option, saving you £2,263 over the five year fixed term.

I'm sure someone will point out that you can save £299 by finding the best direct deals yourself and that is true. If you have the time and inclination to do that, why bother with a broker at all?

Not sure what L&C do. Just pointing out the difference in general here.