Specialist Blog The biggest danger to our industry In my blog in this edition, I want to talk about something that I see as a massive, ongoing threat to our industry. Something that is difficult to police and where the outcomes can ruin the lives of our customers. Something where there is very little chance of any comeback on the perpetrators and where they always get paid, regardless of the outcome. Regulation is evolving and becoming more difficult for those of us that have embraced F.C.A. regulation. It is expensive to be regulated by the F.C.A. and for us it is the equivalent of employing a full-time member of staff. Therefore, every penny we earn counts. I believe the biggest threat to all brokers and lenders in the mortgage market, whether it is residential first charges, second charges, bridging, commercial or development, are a number of RICS surveyors. This blog is not meant to be a dig at all surveyors, as many act with the utmost professionalism and it is the few, mainly employed by the large panel managers that I am mentioning here. It is also not a surveyors’ fault if the client over-estimates their property value or is not entirely truthful about its condition. I want to take you back 10 years to the financial crash. Arrears levels increased sharply for many lenders and in some cases, it was the surveyors Professional Indemnity Insurance that was hit. I remember some surveying firms going out of business as they could not renew their P.I. Cover, only to resurface under a slightly different name a few weeks later with a slightly different structure. I am aware, following a conversation with a drunk surveyor at an industry function some years ago, that some of the national surveying firms have instructed their valuers to reduce the survey figure by 10%-15%, to ensure any future P.I. claims are kept to a minimum. These firms are responsible for a large percentage of the surveys carried out each month in the U.K. Unfortunately, I have no proof of this, other than the word of an insider that had consumed too many G&T’s. What makes it even worse and I will use the example of a recent case we had, where the estimated value was £1m and a surveyor valued it at £600,000, is the surveyor still charged a fee as if the property was worth £1m. I cannot think of any other industry that gets away with acting in this way. Or another example where the surveyor valued the property at £600,000 and on a re-inspection six months later dropped the value to £535,000. Why? Because the market had dropped by 5%! Or the three separate surveyors who recently valued the same property, on the same basis and within a threeweek period, at £2.1m, £1.85m and £1.6m. How can three professional surveyors have a wide variance in opinion? How can lenders possibly have any faith in some of these ‘professional’ people? Or the surveyor who valued a newly refurbished property at £650,000 open market value, only for the property to exchange three weeks later for £750,000. And it’s the lender’s that are also suffering. At a time when increased market competition and decreasing margins are affecting all lenders, losing cases due to either a surveyor’s incompetence or their employer’s P.I. policy is something that must be looked at. And soon. But for me, the biggest victim is the customer. A surveying firm’s poor practices can result in bankruptcy for a client if they are trying to raise money to pay an income tax bill. It can mean a business is borrowing at very expensive unsecured interest rates, because a survey will not allow a lender to offer a cheaper secured rate. It can lead to misery that can last for many years. Subscribe to Tony’s future blogs at: www.SpecialistHub.co.uk/the-loan-ranger What our Introducer said... “The staff at SFS are very knowledgeable, helpful and a pleasure to work with.” Terry S., Broker What the customer said... “Your service was very efficient and professional.” Mr & Mrs W. www.SpecialistHub.co.uk 19
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