Treating the customer as an individual
Paul Stockwell (pictured), chief commercial officer, Gatehouse Bank
With many financial services providers, if you don’t fit the mould then the computer says no, but it shouldn’t be this way.
Everyone is different and, in some cases, mistakes are made that can unfairly penalise customers. Take, for instance, the Gatehouse Bank customer who accidentally missed a credit agreement payment with a bank after mistakenly believing he had set up a direct debit.
This minor mistake negatively impacted his credit score – to the extent that by the time we were approached, a few providers had already refused to do business with him. Luckily, we took a different view and simply asked for evidence that proved he could have made the payment at the time.
Another customer — a buy-to-let portfolio landlord — came to Gatehouse Bank because she wanted to refinance a bridging finance facility she was using to fund a new project. This was secured across a portfolio of six properties and the customer was finding it difficult to find a better deal because many providers do not like to secure finance against more than three or four properties.
Whilst setting criteria is important, sometimes the resulting outcome defies common sense. The sensible approach would, of course, be to look at the whole portfolio and take into account all the rental income and the finance to value ratios of all six properties, which is exactly what we did.
Human underwriting together with intelligent systems makes sense because it ensures a full picture of an individual’s circumstances is taken into account. The basic premise is that you take the time to create a holistic view of a person’s finances. They may not have the perfect credit score or earn a regular salary working a 9-5 traditional desk bound office job, but they could still qualify for finance.
Some brokers we’ve spoken to mistakenly believe credit scores are the only consideration when it comes to assessing client risk on home finance applications — even if they are dealing with a human underwriter.
But when it comes to human underwriting, that’s simply not the case. Applications are considered very much on a case-by-case basis and other strategies are adopted, including:
Human underwriters look at the customer’s full financial situation rather than simply using a credit score that only tells part of the story.
As the working world is changing, it is important to consider different types of income. Many people have flexible income or income from more than one source.
Looking at the full picture – considering all information, i.e. not imposing limits on the number of rental properties that can be considered.
How can you help your clients?
When dealing with a provider that is willing to take a more flexible approach to underwriting, it’s always a good idea for brokers to speak to business development managers (BDMs) first, to find out what things are considered when applications are assessed for affordability.
Build a case for your clients. It’s important to remember that human underwriters invest more time and energy in considering an application.
Remember to act swiftly when you are dealing with complex cases. It could take some time to find a solution to your customers’ financial circumstances.
It’s so easy to rely on technology to make a decision when it comes to evaluating the risk profile of clients. But human underwriting can add an additional layer of common sense. Human underwriting on complex cases can be time-consuming but it’s rewarding too.
No two cases are the same and brokers will find they can help far more customers than they believe, and realise the huge dividends that flexible human underwriting offers.