Alliance & Leicester has become the latest lender to warn of accuracy and validity issues relating to KFI (key facts illustration) data ahead of this weekend's historic shift in regulation of the mortgage market.
The company says it is “committed” to working with sourcing systems post-M-Day, but “will not take responsibility for the accuracy of its data on sourcing systems.”
”We will be ensuring that our information is 100% accurate before it is submitted to sourcing systems,” the company quotes its head of intermediary mortgages Mehrdad Yousefi.
”However, the accuracy of how the information will appear on the sourcing system will depend upon the quality of technology and the staff who manually input the information.”
”It is not entirely clear who will be responsible for the accuracy of data on online sourcing systems and Alliance & Leicester is keen to provide a clear stance on where we stand as early as possible.
"Responsibility for accuracy on online sourcing systems remains a grey area in the mortgage market and we have been in talks with the major system providers to iron out any potential obstacles. The problem we have is that once our data has been handed over to the sourcing system, we have no control over how it is entered, hence we cannot guarantee that the information will remain accurate.”
The debate on the accuracy of systems came to the fore in early September when HBOS and its five mortgage brands Halifax, Bank of Scotland, Intelligent Finance, Birmingham Midshires and TMB gave notice they too would only guarantee KFIs generated online through its own systems.
“The HBOS position is simple,” the group then said.
”The five brands within the group will make every effort to support sourcing systems in providing a compliant solution. However, at this stage verifying product data on every sourcing system in the UK is not feasible.”
”Post-M-Day the only HBOS KFI guaranteed to be accurate will be issued online from one of the HBOS brand websites.”
Responses from sourcing system providers suggest the lenders’ view is flawed because software developments have been based on regulatory ground rules that specifically allowed for tolerances of data manipulation.
Tolerences within 1% following M-Day are allowed according to FSA documents, as outlined in, for example, Mortgages: Conduct of Business (MCOB) rule 5.4.3.
KFI issues may become relegated to second spot, however, if the latest Council of Mortgage Lenders warning is borne out.
The Council says lenders may struggle to do business because of an imperfect mechanism to check that intermediaries they do business with are properly authorised.
The problem stems from heavy reliance on the FSA’s Register to tell who is authorised or not.
Intermediaries may be authorised yet still not appear on the Register, leading to delays as lenders carry out further checks – that is, if such additional checks are even possible: the CML says in practice the Register will be the only way reliable source for many lenders.
”Lenders do not want to reject or delay a customer’s application, but they cannot ignore that, from Monday, it will be a statutory requirement that they only do business with an authorised intermediary. If there are not straightforward and reliable ways of checking this, there could be some disruption, but lenders will make every effort to minimise this,” the CML says.IFAonline
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