CCCFA an opportunity for advisers

Mortgage advisers will benefit from CCCFA lending changes as borrowers seek help with complex home loan applications, according to Squirrel's John Bolton.

The Squirrel founder believes the forthcoming Credit Contracts and Consumer Finance Act changes, which put additional emphasis on lenders to review customer affordability, will "slow things down" in the application process.

While loan applications will become more "painful", Bolton says, the complexities should play into the hands of brokers.

Bolton believes more home loan clients will seek specialist help after being turned down by their bank.

"Suddenly it's gonna feel very difficult for customers dealing with their own bank. But brokers should be having a party on this, because suddenly they will have a lot of customers."

He also believes advisers will increase their market share as borrowers seek help.  

"It's going to make it harder for consumers to borrow money," Bolton said. "But it'll be great for the broker industry. You're gonna see a lot more borrowers using brokers. Brokers will end up probably in excess of 60% of the market within a reasonably short period of time."

He called on the industry to prepare for a greater amount of paperwork and more clients coming through the door.

"I guess the only problem that we've got to deal with is the fact that there's gonna be a lot of paperwork and it's gonna be a painful process. Brokers may be moaning, but they should actually be having a plan," he added. 

Changes to the CCCFA have been designed to protect vulnerable borrowers, yet the law is broad in scope and will capture the biggest banks and mortgage lenders. 

Advisers report that banks have begun to place a more granular emphasis on affordability, reviewing subscriptions, buy-now-pay-later services, and other small outgoings. 

Banks are expected to collect more evidence of customer affordability under the changes, which come into effect on December 1. 

Bolton said the loan application process had already become more difficult for borrowers – even wealthy clients.

He said bank customers in a strong financial position were being made to evidence their income in minute detail under the new rules.

"For one client, a chairman of a large company, I had to go to the CFO and get a letter confirming his income, even though he owns half of the bloody company ... It's just stupid, right? It's a real regulatory overstretch."

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