Lloyds slammed for ‘pulling the plug’ on active applications
Bank should have stated it was pulling out and set a deadline for applications, adviser says.
Advisers have hit out at Lloyds following its decision to suspend all international mortgage lending, after clients with accepted applications have found the bank is no longer going to be providing financing.
While not technically a breach of compliance, advisers said the move by Lloyds cut off applications that are already in process but that are not legally binding is “unacceptable”, arguing the bank should instead have stated it was pulling out of the market and set a deadline for applications.
Ray Boulger, senior technical manager at John Charcol, said at least two clients had been affected.
He said: “On of them had their mortgage offer and they did agree to honour that. Another had had the valuation done and all documentation supplied and approved in principle but they have now said they won’t be offering.
“They said they had operational issues and implied at the time - we were told verbally - it would take about eight weeks to resolve the issues. The client said they would stay with it but they have now said they don’t know when they are going to be lending again.
“Officially they aren’t saying much but the implications are pretty clear. Why would you refund a valuation fee if someone’s prepared to wait eight weeks and say they aren’t going to offer?
“What is completely unacceptable is to pull the plug on cases they have actually accepted an application for and confirmed it was ready to be offered.
“A lender with any common sense would say ‘we are pulling out of lending either permanently or temporarily, and this is the deadline for applications’.”
David Hollingworth, associate director of London and Country Mortgages, said what you typically see when a lender decides to stop lending is cut-off date beyond which new applications will not be accepted.
By not providing such a deadline in advance a lender can end up leaving prospective customers “high and dry”, he added.
Mr Hollingworth said: “It sounds like some people that thought they had found a solution have had the rug pulled from under their feet.”
Mr Hollingworth added that Lloyds International has been slowly tightening criteria for lending over the last six months or so.
A spokesperson for Lloyds said: “Our acceptance criteria for new business are subject to regular review and we are currently reviewing this product to determine whether it meets the group’s current lending appetite and criteria.
“Once this review has concluded, we will begin accepting new applications again.”
It is understood that the review could take until the end of the year. At time of writing, Lloyds could not reveal the number of applications that will be affected.