Frequently Answered Questions for Brokers

I have already dealt with ID requirements for my customers, the borrowers. Why is this required at this stage?

Since the financial crisis, the requirements from lenders of the solicitors dealing with the remortgage process have become much more onerous. At the same time, our regulator the Law Society of Scotland has greatly emphasised with firms of solicitors under its regulation, the full extent of the money laundering regulations. These include a much wider definition of potential offences of which solicitors are to consider.

There is no doubt that the process for remortgaging is not completely “joined up”. Different lenders have different approaches but there is no single standard. That seems some way off and for the meantime we have to deal with the detail of the lender’s requirements and our interpretation of our regulator’s requirements.

I have recently introduced a remortgage to the same lender but these requirements were not identified previously by you or other solicitors on the lender panel. Why is this?

Good point! There are two reasons. The first is that different remortgages trigger different responses. Broadly speaking remortgages involving properties that are currently mortgage free, circumstances where large capital sums are being released and expensive properties will trigger the need for Certified ID. The second aspect is that different solicitors interpret the requirements from regulators in different ways. The problem is that if a remortgage should ultimately result in a repossession, solicitors acting on behalf of the lender are forensic in considering whether the solicitor who dealt with the remortgage should have identified a problem. In that environment, there is a need for McVey and Murricane to adopt a sensibly cautious position. As in other areas, if there was a clearly agreed an objective standard it would make life a lot easier. However, such a standard does not exist.

I have already carried out ID but I notice that sometimes that is not included in the acceptable list. Why?

Some lenders do not allow certified ID from a broker as part of their own underwriting requirements. Where certified ID from a broker is required it is essential that the broker is an appointed representative of an institution authorised by the FCA.

I am not happy with the position and I want it reviewed. What do I do?

Ultimately, the lender requires us to carry out checks that satisfy their requirements and our regulator requires us to carry out checks that suit their requirements. As you can imagine in a very competitive fixed fee environment, we wish to deal with the remortgage as efficiently as possible so we are not carrying out any more work than we need to do. But the sanctions upon us are very considerable. If we do not meet the requirements of the lender we face a claim and potentially being removed from their panel. If we do not meet the requirements of our regulator then we potentially face disciplinary action. In any case we face severe legal consequences including consequences if we do not do this part of the job properly and there should be a subsequent issue.

We recognise that in many ways the authorities are focusing upon the wrong group of people when imposing these regulations and requirements. As is often the case, it is the individual requires to “jump through hoops” rather than the tax dodger or major fraudster. The direction of travel in this area is not good. Provided that it still applies after Brexit the next version of Money Laundering Regulations due in 2018 is much more imposing and extremely onerous.