Daily dilemma, Fasttrack of Self Cert?

Conrad

As a broker I must disharge my duty to TREAT CUSTOMERS FAIRLY, so help me out here with a dilemma I face regularly;

Client wants to remortgage, but is self employed and does'nt have up to date accounts yet.

If she stays with current lender, typically a rate of around 7% is on offer as they are with a lender that originally did them a self cert deal.

So here's the TCF dilemma;

1) In accordance with TCF I need to arrange the best possible deal for the client in order to bring about an affordable attractive deal

2) The best deals where income evidence is not necessarily sought are of course the FAST TRACK options, indeed the costs of remortgaging can be justified where a competetive fast track deal is achieved as opposed to the far higher self cert deals

BUTTTTTTT - From a pure compliance angle surely a self cert deal is best advice given the client could find themselves in the uncomfortable position of having to provide income evidence AFTER completion on a fast track deal.

BUTTTTTT - advice to go self cert does not achieve the clients need and desire for the most competetive deal.

How do I square this circle?

toonfish

There is no definitive answer, and today even self-cert is not really self-cert a lot of the time with many more requests for further information as a result of random audits, bank statements for example.

Personally as long as the income is there I tend to try and speak to the accountant first and fast track where possible. The key has to be getting the best rate fo rthe client.

silvercar

BUTTTTTTT - From a pure compliance angle surely a self cert deal is best advice given the client could find themselves in the uncomfortable position of having to provide income evidence AFTER completion on a fast track deal.

But if customer understands that they may have to provided income evidence and is willing to go fasttrack you have covered yourself??????

I would have thought people would be more worried about having to provide evidence between mortgage offer and completion than after completion.

Dan_Collins_2

I think its nearly time to stay away form that type of lending.

luckyfool

silvercar wrote: »

But if customer understands that they may have to provided income evidence and is willing to go fasttrack you have covered yourself??????

I would have thought people would be more worried about having to provide evidence between mortgage offer and completion than after completion.

My networks compliance department insist that I request evidence of income for all Fast-track cases, which means if I stick to the letter of their law then this is not even an option for this type of client. I suppose I could argue the case if I requested a couple of Business Bank Statements or contracts to show that the declared profit figure is in line with their current trading?

I have always been of the view that if the client is aware of the nature of Fast-track and that the lender may ask for income evidence, then its a valid route to go down. Compliance types seem to disagree though!

Conrad

Thanks both of you.

I agree with both of you.
Just called the FSA to discuss and they said that as long as my notes clearly evidnece a discussion around this subject perhaps backed up with a clearly worded statement then thats about what they would expect.

I have today ammended the self cert sign off to include fasttrack andincluded this in my own TCF review (which is taking bloody months btw:mad: )

In the end the key objective of the client is paramount and that is surely achieving the best possible deal outcome

Conrad

The rub comes with trying to demonstrate affordability with Bank statements. Compliance officers I find tend to want to see these but they simply do not seem to live in the real world. As an example we help a lot of London black cabbies, very few of which put much of thier income into the Bank.

homer_j_3

TCF, as we all know, is based around outcomes as it as step towards pricipals based regulation.

The 6 outcomes of TCF are:

Outcome 1: Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.

Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.

Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.

Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.

Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.

Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.

So you have a client that does not upto date accounts. Does that exclude insufficient accounts also?

Look at each option and ask yourself the question and ask where you can evidence this if you are accused of breaking TCF rules.

homer_j_3

Conrad wrote: »

The rub comes with trying to demonstrate affordability with Bank statements. Compliance officers I find tend to want to see these but they simply do not seem to live in the real world. As an example we help a lot of London black cabbies, very few of which put much of thier income into the Bank.

Tax evasion is illegal and I understand your "real world" comment because we all know it happens. You have demonstrated before that you are ok to turn a blind eye to this but you have to realise that a lot of the "principals based regulation" now puts the onus on senior management to understand the issues and have appropriate frameworks/processes in place to ensure that you do not fall foul of the FSA.

The game of "Our compliance person never told us" argument wont wash as I understand it.

As a DA, you will have this responsibility on your shoulders.

luckyfool

homer_j wrote: »

Tax evasion is illegal and I understand your "real world" comment because we all know it happens. You have demonstrated before that you are ok to turn a blind eye to this but you have to realise that a lot of the "principals based regulation" now puts the onus on senior management to understand the issues and have appropriate frameworks/processes in place to ensure that you do not fall foul of the FSA.

The game of "Our compliance person never told us" argument wont wash as I understand it.

As a DA, you will have this responsibility on your shoulders.

And by extension, Tax Evasion = Money Laundering and technically under Money Laundering Legislation you are criminally liable if you turn a blind eye to something you suspect to be Money Laundering.

homer_j_3

Tax Evasion falls under AML rules but is not money laundering itself. The consequences are the same though, as you state.

It will fall on deaf ears no doubt though.