Category: Business Quality

Sally Says: Potential Property Hijack

Managing Director Sally Laker looks at a recent scenario that highlights the importance of communication and case checking in the property chain.

Just when you think you have seen most events linked to a sale and purchase transaction, you realise that there is always an interesting story that reminds you of the need to be vigilant. Recently a friend decided to downsize from their big family home to a newer property with no mortgage and to release some cash. The move took place but had turned out to be a nightmare for all. She assumed that this must happen all the time and was surprised that I had never come across it before.

In all there were seven people in the chain, only two with mortgages, and exchange was all set for a Thursday with completion on the following Monday. As soon as the removal vans were all loaded up everyone was waiting for the completion confirmation. They all received a phone call to say that one of the lenders had decided to carry out an ‘audit’ and therefore could not complete on that day, and they would be advised once they could confirm a completion date! So with a completely empty house, and everything in the removal van, they ended up having to pay an additional £1600 for storage as completion wasn’t until three days later.  My thoughts were immediately that this must have been some sort of fraud or money laundering alert, right at the last minute.  I decided to look into what kind of reasons might have triggered the lender to impose the action at such a late point in the process.

Whilst unusual there are a number of possible reasons for the lenders actions.

It was unlikely to be money laundering because this would generally be checked and picked up by lenders before completion. This is one of the key reasons that lenders will stick to a panel of solicitors that they have approved.

It is possible that when the lender system screened the transaction that the outgoing accounts details hit a trigger that stopped the transaction from going ahead. Again, although not impossible, this would be unusual as this would normally have been thoroughly checked before getting to this stage – especially with an approved solicitor. The fraud screening system may have picked up that the bank account and sort code was linked to a previous fraud, and maybe the lender did not work from a closed panel of solicitors.

Alternatively, it could be an example of a “property hijack” or false positive match. This means that the applicant appeared to be the same person screened at application stage but on closer inspection they were not.

Another possible scenario is that a new piece of intelligence was received and it matched a past case that then concerned the lender about the collateral they were lending on. It is possible that the lender received information and, given their experience from the sequence of events, they suspected the person selling the property was not the owner. That would make it likely that the solicitor would be involved too.

New build is another area that lenders are currently concerned about, mainly regarding assignable contracts, also called “contracts of novation”. This is where a developer is selling his property via a middle man who has offered to take on, for example, 20 units at a reduced price. The middle man buys them for, say, £380k each rather than the developers asking price of £500k. The middle man is confident that he can sell them speedily, which in turn, frees up cash for the developer. They make an agreement between themselves and the middle man sells them at £450k each. The middle man offers the buyer a £50k cashback off the £500k purchase price on completion. That enables the buyer to apply for a 90% LTV mortgage as the purchase price is £500k, and a credit (cashback) of £50k is passed directly back to the buyer once completed.

This should normally be picked up by the solicitor who will notify the lender, as there is no buyer deposit. If the lender finds out about this prior to the completion it would mean that they had lost transparency on the deal, and an alert would be placed on that developer and that broker.

It is impossible to say what the real reason was, and it seems that all the transactions went through, but it is useful to know what can be hidden behind a seemingly normal transaction. This example is a very good reminder of how important it is to know who we are dealing with, and to carry out thorough checks in all cases.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


The importance of storytelling: An interview with protection adviser Caroline Hawkins

With National Storytelling Week in February, we spoke to appointed representative Caroline Hawkins about her involvement with charity Seven Families, who work to raise protection awareness among the public through telling real-life stories about those who have experienced the hardship of not having protection when it was needed most.

Caroline is an experienced independent adviser specialising in Business and Personal Protection and large loan mortgages. Working at appointed representative Direct Finance Solutions, Caroline prides herself on building long term relationships with clients over time, supporting them over the years with regular reviews and ongoing advice.

We spoke to Caroline about her involvement with Seven Families, the effectiveness of telling stories and the power of protection.

So how did you get involved with Seven Families, and how has it helped you promote the need for protection?

As a protection adviser I have always ensured I maintain a strong presence not just with my clients but in the industry as well. This includes social media, which is a fantastic platform to get the word out and share stories. It was through LinkedIn, a very good social media platform for professionals, that I was contacted by a representative at Scottish Widows, who said that Seven Families were looking for an adviser who was passionate about protection and raising awareness to look after their seventh family, the Knights.”

“The client, Melanie Knight, had lost her job as a midwife with NHS in 2014 after prolonged absence due to arthritis. She was also diagnosed with Danlos syndrome, a disorder of the connective tissue affecting the movement of joints. Seeing the support of her employer ebb away was a painful process and it is a sad story that tells the tale outside of just the facts and figures.

“As soon as I was on board with Melanie I was able to help her with the life cover she currently had, as her provider offered access to Best Doctors. Often it is the knowledge of products and providers that makes the difference for clients, as they sometimes don’t associate the benefits of their life cover outside of the final pay out. Getting value out of their policies through ongoing support is all part of the service for my clients.”

How and why do you share stories with clients?

“I have my own personal protection story that I sometimes like to tell because it highlights not just the need for protection but also for the right advice. That is why I want to get it right for clients as much as I possibly can, because I know how difficult and stressful these situations can become. Good and bad news stories are important, to show the difference between being without and being with protection just when it is needed the most. The Seven Families story is a great example of this.

“One of the most important aspects of my job is to build long term client relationships built on trust. Not just as an adviser but as a professional friend that they can turn to for support. If a client wants me to find out more about their policy after they have taken it out, or has any other protection questions I always encourage them to call me.

“Stories can have a very powerful impact on people, sparking emotions and helping them to relate to the subject at hand. It is still important to discuss health risks and comparisons with state and employer support, but telling a story that you believe in or is close to your heart can have a real impact on clients, helping them to learn the lessons others have experienced in the past.”

We know that advisers take different approaches to protection. What techniques and formats work best for you and your clients?

“I know some firms prefer to have a protection specialist, or separate the protection conversation altogether. But I believe in letting the client know very early on in the process that we will be having a mortgage and protection conversation. I truly believe in treating customers fairly, and this means knowing your products and the providers well enough to have confidence in your advice and showing that you take it as seriously as any other part of the discussion. For me, it has always been less about selling a product, and more about helping the client protect themselves.”

“Understanding the benefits of each product is also a really important aspect of advice, and I have seen these added-value benefits make a big difference to people’s lives. Knowing which deferred periods are best suited to each client also delivers the best value out of the policy. It is after all a notoriously complicated market, which makes knowledge and understanding central to protection advice, especially as every insurer is different.”

What are the most common consumer objections that you have helped them overcome?

“Misinformation still sticks to the industry and it is surprising how many assumptions about employer and state support are made. Some people are simply not aware how long and painful a state claims process can be compared to a good value, comprehensive protection plan. I often ask clients how reliable they believe insurers to be and many assume it to be around the 50% mark, as opposed to the real figure which is normally above 90% reliability.”

“Sometimes clients just don’t know about protection at all so it is important to bring it up as soon as you can, letting them understand the benefits. More importantly, let them hear or see the real life scenarios that would leave them in a difficult situation, helping to break through the “it won’t happen to me” stance.”

Is it just as important to share stories between advisers and within the industry?

“Absolutely. It isn’t just about raising awareness and talking to clients, it is also about spreading the word and sharing stories between advisers within the industry or network. Whether through social media or face to face networking, I find that stories genuinely affect those I speak to. At networking events I enjoy standing up and speaking about protection, with profound effects on others who come up to me afterwards.

“Attending seminars and events featuring providers is an excellent way to build knowledge around protection, whilst staying up to date with all the latest innovations and changes. If you don’t believe in what you are selling, then clients will pick up on it and be put off. I use CI Expert as well, which is a very useful tool to compare and contrast policies and to talk about protection with clients, helping to find the right “fit” for their circumstances.”

 Do enough advisers embrace protection?

“Many advisers really engage protection and are seeing positive results. But unfortunately there are some that are not as interested. I think this is a worrying trend considering the importance of Treating Customers Fairly. Even Business Protection is not considered enough which can be devastating for the parties involved when not discussed properly.

“Some of it is simply about confidence. If they do not feel they know the insurers and products well enough they might feel they cannot provide the best advice for their clients on the subject. But I believe advisers also have a responsibility to understand the industry and ensure the conversation is fully incorporated into advice. As some advisers simply don’t know how best to talk about protection, I do what I can to spread the word, share advice and most importantly share protection stories where I can.”

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


Mortgage Intelligence adviser update: Making the most of the admin role

National Protection Sales Manager Bernie Buron looks at whether advisers could be getting more out of administrators and paraplanners within the firm, whilst also highlighting what they generally can and cannot do.

I have had many enquiries from advisers asking exactly what an administrator/paraplanner can and can’t do within an adviser firm. This is an important question to ask, with many advisers rightly erring on the side of caution as to how best utilise administrators within such a tightly regulated sector. But with advisers so very busy at the moment, they are eager to ensure they are getting the most value out of their resource.

I already hear of success stories where the right set up with an administrator can be a godsend to advisers, especially during busy times. But it surprised me that some advisers do not even have an office administrator, and one or two are finding the workload becoming a big challenge.

So what can an administrator/paraplanner do?

Administrators, sometimes referred to as paraplanners, are utilised by a lot of advisers to free up more time to spend with clients. In some cases, opening up the admin role can even be a good way for them to become an adviser themselves through the firm, by learning more about the role the adviser does.

I have spoken to many advisers who have fully ensured their administrators/paraplanners are helping to free up time where possible, which gives the advisers in turn more time to spend with clients and deliver great advice. Here are just some of the ways that administrators have been helping out advisers with their protection, general insurance and mortgage business levels:

Freeing up time by chasing quotes | Handling general client queries | Preparing quotes ready for client discussion | General research on client cases | Calling the protection desk on behalf of the advisers | Underwriting and pre-underwriting | Retrieving and submitting Iress quotes | Chasing medical information from clients to receive the best terms

What can’t an administrator or paraplanner do?

What an administrator should not be doing as part of an adviser firm falls into two main categories:

Advising

Advising would include discussions of appropriate terms, rate type, best lenders, C&I vs IO, suitable amount of life cover, whether it is best to go pure life or relevant life etc. It is important to recognise when a role becomes advisory and ensure this is done by a qualified adviser. This includes certifying documents which must also be done by the adviser.

Fact Finding

Fact finding is slightly more difficult to define categorically, but collecting hard facts (name, DOB, address etc) is generally ok for administrators/paraplanners to do. However, retrieving softer facts strays away from what is allowed. This may include, but is not restricted to, asking a customer their view on interest rates or questioning how they intend to repay an Interest-only mortgage.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


Mortgage Intelligence Update: Helping clients with adverse credit

Head of Mortgages and Insurance Stephanie Charman takes a look at clients with adverse history and what advisers can do to help them

There are many reasons why a client may have an adverse credit history and may need to consider a more complicated borrowing scenario. Knowing who you can turn to help your client in these circumstances is very important and we want to help you find the right solutions for your client wherever we can.

Why might clients with adverse credit need helping?

Someone with adverse credit will most likely have something on their credit history that could mean a regular high street lender will not want to lend to them. A low credit score can be detrimental when looking to borrow. This can be caused by something as simple as not being on the electoral roll, missing a bill payment or not having an established credit history, which is why helping your clients get ‘mortgage ready’ is really important.

Recent adverse is much more damaging to the client’s credit score as most lenders consider any adverse which is over six years old. Your client may also need to remortgage to consolidate existing credit, which may help them with their credit score in the long term but should be considered alongside other potential options. Bad credit also affects both parties if your client was named on an agreement that has caused adverse credit history, regardless of which party has caused the issue.

Who and what can help clients with an adverse credit history?

As we all know, bad credit can be repaired. This can normally take two or three years, depending on the severity of the adverse credit, and some clients may have already attempted to repair their credit using credit cards, small loan, or a finance arrangement.

Some specialist lenders do not even use credit scoring on prospective borrowers, although they will still examine a client’s file. Some lenders that do this are Magellan Homeloans, Precise Mortgages, Kensington Mortgages and Aldermore. Some other main lenders will also look at mild adverse but still credit score. Positive Lending can also be used for second charges and on some adverse borrowing needs.

BTL lending is really tough on those with adverse credit, especially when the credit is caused through previous arrears, defaults, missed payments or CCJs. In this case, Precise Mortgages may consider the client under some circumstances.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.