How Much Are You Really Worth?

charlesfrankfinance

Often times when pitching for new secured loan business we hear sentiments to the effect of “my commission is adequate”.

Adequate is fine, run of the mill, mundane, not very exciting is it?

Imagine if your spouse described you as an “adequate” partner? How would you feel?

Do you look into the eyes of your children and think of them as “adequate”? That’s the kind of connection that makes a kid grow up and write a book called “A Child Called Adequate”.

Does Hallmark make Mothers’/ Fathers’ Day Cards bearing the slogan “To an acceptable Mum/Dad”

We demand more from the important things in our lives, we set high expectations, we draw pride from our family lives, equally most of us draw pride from our professional lives…otherwise why do we do it?

Your clients set high expectations from you, so isn’t it about time, as a broker the lifeblood of…

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Mortgage Market Review

Mortgages Blogged

Today the European Parliament passed what is called the “European Mortgage Credit Derivative”.

This is a new set of rules which unify mortgages taken out anywhere in the EU.  Some of these rules have already been factored in for April next year in the UK when the Mortgage Market Review comes into force.  This means individuals seeking new mortgages will be asked more questions around affordability not just now but for the future should interest rates rise.

It’s not very well publicised yet but it may have an effect on your mortgage application come April 2014.  The most likely effect will be you may need to produce more documentation to the lender and go through a more comprehensive advice interview with your adviser.  Mortgage Solutions reports on some of these things today in their article.

There will be more articles published around the review in the New Year.

A…

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Wag the Dog

It’s almost here everybody, have you been good girls and boys?

No not Christmas… REGULATION, and the FCA’s naughty list is a far worse place to be than Santa’s little Black Book.

The soon to arrive FCA Regulation of the secured loan marketplace is long overdue and should be welcomed by enlightened stakeholders with open arms, yet to some the spectre of regulation is making the cracks all too apparent.

Personally I don’t see the big deal, my ethos is to show up to the office, call FCA regulated firms offering my services, provide an excellent, compliant service to their customers and my intermediaries alike, then pay them what I have promised to pay them.

Those that do not engage in the secured loan marketplace, don’t because they have made an educated decision based on the level of training they have endured and do so based on current regulatory frameworks. If an IFA deems a packagers product portfolio to be inferior to his mortgage offering, we can present the advantages of the secured loan, even question his wisdom at electing to mortgage a client, but surely, until we are regulated and qualified to the level of the IFA it is not our place to castigate them.

Regulation will not change that, regulation won’t change what I do one little bit, and regulation will not change what that IFA does either.

Yet in what appears to be a display of panic, some contemporaries seem to think that they can wag the dog, that they can preach to those who have known nothing other than regulation by the FSA/FCA, be derogatory about the very mouths that feed the industry.

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Will a network embrace my service if I castigate it and its members? Unlikely

Will I change the minds of those who do not currently look to secured loans as an alternative by attacking them from my pulpit of ignorance? Unlikely

Over time, will those individuals engage with us because we demonstrate the ethics, service and knowledge that they demand? Absolutely

Regulation will change nothing in terms of business flows, those that use a preferred secured loan provider will continue to do so, those that don’t will need convincing that we aren’t all trying to teach them to suck lemons.

What regulation will change is the working practices of firms that are presently not compliant, it will uncover previously undisclosed bad practice, and it will extract rogue firms from the marketplace; perhaps that is reason enough for some to panic!

Victoria Pendleton Called the Police

I am sick and tired of lenders relaying information to brokers and clients alike that makes no sense on any level.

Let me clear that up, generally speaking the second charge market place appears to be populated with “can do” people, focussed on the client and willing to make concessions in order to further the interests of all; no I am strictly speaking to the first mortgage lenders who will gladly spin a yarn that Aesop would be proud of.

Sadly, whereas Aesops’ fables come with a clear life moral, the first mortgage moral seems to be clearly defined as “to hell with the customer”.

The lack of care and realism is profound, so profound that the term “customer service manager” is for most of the first mortgage lenders a tragic oxymoron. The entire ethos of displaying unhelpful unrealistic behaviour is ingrained in their culture, you only have to look at their advertising; it is fanciful to say the very least.

Take the adverts where we see a strange fat balding man sitting opposite the nations’ sweetheart Jessica Ennis, banging on about his mortgage and current account. There is Ennis sat down on the floor (presumably she is burning her furniture for fuel since the latest energy price hikes) in her pink furry poodle slippers, the choice of footwear for the cold millionaire athlete who can’t afford to turn the combi on. Then from nowhere this guy appears, he doesn’t introduce himself he just starts explaining some personal financial vehicles he is benefitting from. Presumably Ennis sees this chap as an angel sent to help her manage her money more frugally, like a meals on wheels version of Martin Lewis, letting himself in and barking an incessant unregulated tide of advice, only in a nice non-annoying way that doesn’t worry Ennis.

 

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A while ago I let myself into Victoria Pendletons’ house, I sat and waited, I wanted to tell her, without her request, about my ISA with Nationwide. She came in with her husband (didn’t know she was married), he was quite stroppy you know, she was crying, they called the police, I got a caution. They didn’t even open the ISA, complete waste of time that.

That’s the thing, this fantasy plain that banks and their customer service reps inhabit, has none of societies rules, no anchors of common sense or ethics, and they will run urine scented yellow liquid on your head, soaking you to the bone and gleefully tell you “it’s rain”.

The “benevolent home invader” advertising bank recently told me that they had not heard from me or my company regarding a mutual client, a client who was under threat of repossession. Let’s say that this conversation took place on the 11th of October 2013 after a huge and frustrating verbal arm wrestle. My response “do you come to work in a delorian? Or is it that you have psychics working there like on that Minority Report? Or are you lying to me?” Was met with bewilderment. I explained that given they had written to us with a letter dated 10th October “that one of the three options had to be the answer, which did she think was most likely?” Was still met with confusion. 

The sad fact is that it seems that the duty of care that first mortgage providers are meant to display to their customers, is being passionately upheld by the second charge market, a market that genuinely wants to help clients, whilst the fist mortgage company will in the majority of occasions willfully obstruct with a lack of service.

The denoument is that after 2 weeks of fighting customer service managers, the banks collection team sorted the issue out, start to finish in 30minutes. Unfortunately this issue is not isolated, and having spoken to several of my contemporary packagers, is the norm. 

The irony is that it costs £140 for BSQ consent and a payment profile from this lender. They have demonstrated that they can turn it round in 30minutes, thus they can if they put their minds to it hold onto the majority of the £140 as the cost of servicing the request would be so much lower IF THEY JUST DID IT. Nope, instead we play the part of Jessica Ennis/ Jensen Button/ Rory McIlroy, desperately trying to make sense of what the bank is telling us, whilst secretly wishing we could sort them out with a bat.

Rise Of The Machines

In the second decade of the 21st century, the machines rose to take over the Earth.

No, not the beginning of a post apocalyptic dystopian nightmare, like “The Terminator”, more the dystopian nightmare that is the secured loans packager scene these days.

Increasingly packagers are relying on, and promoting the use of automated quoting engines, personalized and flash marketed as tools that empower the intermediary to decide the destiny of a loan applicant from the comfort of their own office, or indeed from the armchair of their clients’ living room!

Undeniably these engines are feats of IT engineering and add kudos to a brand as the bragging rights of who has “the most powerful tool” are sought.

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I can’t help thinking that automation is not an advancement within our industry more a hobbling of the professional standards intermediaries around the UK demand.

A simple question; why would you choose to spend ten minutes punching details into a machine for it to spit out an answer that needs human verification, when you can pick the phone up to a trained underwriter who will take a maximum of 3 minutes to tell you if a deal can be done?

When did we wake up and elect that automation was a preferred choice?

“God I absolutely love the series of multiple choices I have to make for 15 minutes when I call BT only to be put on hold and made to listen to James Blunt warbling for 35 minutes before I can speak to a person. This is by far the best way of doing things” Said nobody…ever!

Here is another question; what impression does it give a client to see you interfacing with a machine as apposed to the warmth of dealing with a trusted colleague at the end of a line?

The quoting engine won’t be on the end of the phone for your client at 8pm to discuss concerns they have about fees/rates/how quickly that all important consolidation loan will complete!

Finally, who is getting the best out of the relationship between intermediary and packager? Bearing in mind that the intermediary, supplies a sourcing system with their contact data (data with intrinsic value) and then, in order to generate a quote, supplies the the sourcing system with their clients’ data (data with intrinsic value). What they get in return is the best guess an algorithm can provide, without a credit and land registry search.

Ladies and gentleman, I give you the first calculator that in order to provide a solution, takes in data, licks the end of its’ mechanical digit, hoists digit into the air…and… guesses.

It is to be borne in mind, that the average intermediary will at the very least be CeMap qualified following a course of education and testing. The average secured loan underwriters’ only qualification is experience. How much experience, lessons learned from underwriting a loan from start to finish are underwriters who sit behind a quoting system garnering?

There was no great science behind underwriting, just good product knowledge underpinned by a strong desire to help introducers and clients. Relationships forged from that very first conversation about a deal.

Recently I met with the sales director of one of the leading secured loan lenders int he UK, he in an off the cuff remark said words to the effect of “most of the secured loans underwritten don’t fit criteria, they all have their little idiosyncrasies.”

Automation relies on criteria, algorithms do not like idiosyncrasies, rendering them unfit for purpose.

As an intermediary, ask yourself the question; apart from the flashy graphics, what does a secured loan sourcing system really add to my business?

Victorian Surgery in the Modern Mortgage Market

Probably an odd title to broach a subject on my mind. So how are mortgage market practices reflective of those within Victorian surgeons? I hear you ask.

In 1842 Sir Robert Liston, the most pre-eminent surgeon of the age was timed amputating the leg of a patient; the time recorded? A mere 30 seconds.

30 seconds, a blink of an eye within a lifetime, no time to think of alternative treatments, no time for the poor (and conscious)  patient to back out and make a judgement call, and no consideration period where the poor patient may have come to the conclusion that waiting for 86 years for Penicillin to be unearthed, may be the preferable option.

How did he get so good? How did Sir Robert Liston become so very proficient at sawing off an adult leg in less than a minute? Well he used to do it all the time, it was his “go to” treatment.

“Got a bunion? … Amputation is the answer”

“What’s that a verrucca??? Ooooh nasty… yes I shall have to remove your leg at the hip”

“Sprained ankle sir…”   You get my drift

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It would be lax for me to suggest that Sir Robert was a bloodthirsty fiend carelessly hacking off limbs, when a sticky plaster and a “wait and see” approach would have sufficed.

I think it is a fair assumption that Sir Robert thought he was doing good for his patients, ridding them of toxic infections by totally removing the problem, and through habit, becoming the very best at hacking off limbs.

Fast forward to today, and let’s not pretend what we do is leg surgery, but all too often the habitual approach within the mortgage market is embraced without a thought for an alternative “stick plaster wait and see” option. I speak to dozens of brokers each week who pronounce “I have no need for secured loans, I am able to remortgage all of my customers”.

Whilst I don’t doubt the mortgage brokers’ proficiency at performing remortgages, and I don’t doubt that for those mortgage brokers who power through a remortgage in record time their heart is firmly in the right place, surely it is worth considering the alternatives?

“Why remortgage a client looking for a further advance who is on a rock bottom SVR on their principle mortgage? Why not top it up with a second charge before waiting for interest rates to rise and fix a remortgage on that event?”

If the answer is “I will always remortgage” perhaps, just PERHAPS there are some legs being hacked that merely need an elastoplast.

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The Rodent’s Nest

Recently I was having a frothy scoop in the Fly Half and Firkin Tavern with a friend and some of his associates, the subject of conversation meandered onto what I do for work.

Innocently I divulged that I package secured loans, the response was less than complimentary, with some only half joking that the likes of me were responsible for the banking crisis.

My protestations were met with suspicion but I think I managed to put enough of a gap between my underwriting of Mrs Jones consolidation loan of £10,000, and the $613bn owed by Lehmann Brothers. Poor Mrs Jones, if she only knew her profligacy with the Debenhams card had inadvertently led to global financial meltdown!

It did get me thinking about the lazily formed opinions of the general public though, and how they appear to be flocking in their droves to take financial counsel from meerkats.

Meerkats are vermin, rodents, I have never met a meerkat capable of doing an affordability calculation, neither have I met a meerkat who can create an accurate medical disclosure for a life cover client.

Meerkats are manifestly unqualified in all facets of financial services yet they get all of the business… something is afoot. I can’t help thinking that Joe Public takes comfort from the meerkats’ closely set eyes and charmingly mottled pelt.

Coincidentally the level of clients who entrust their high street bank with their life cover, pensions and mortgages without taking financial advice is truly baffling.

It seems that sound advice is becoming a commodity that is less valued by the Regulator of the moment than gimmicks. Whilst the regulators scrutinize to the Nth degree the advice given by IFAs and Mortgage Brokers; Sergei (the Russian citizen) meerkat is offering a stuffed likeness of himself and his rodent pals in order to take insurance products. Is this incentive strictly ethical?

On top of which we are told that the Regulators will deem “simple mortgage rate switches” an issue that does not require scrutiny, in the same timeframe as Tesco launch a “non advised” first mortgage product! I bet you a fiver that within a year mortgages through Tesco will come with a thousand clubcard points and 5p off a litre of petrol.

Well perhaps if you can’t beat ’em join ’em, meet our new member of staff Klaus. Klaus is a ferrett, he can’t count further than 6, he once used a calculator accidentally and worked out the square route of 8008135 (yes his schoolboy charm is there for all to see), he is Hungarian and he gives out stuffed rabbits for loan applications, at least we hope they are stuffed rabbits and not his latest kills.

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What could possibly go wrong?

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