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Statement of High Net Worth

One of our clients has applied for some finance personally, and we have been asked to complete a Statement of High Net Worth by the mortgage company.

We have never had to complete one before, and having consulted the ICAEW they advise that we have to get a letter of engagement signed by our client and the mortgage company, and also to approach with caution.

The mortgage company and the broker keep saying that no other accountant has ever asked the mortgage company to sign a LOE and I'm wondering what everyone else has done in this situation?

We are being asked to express an opinion which means we can't just sign and return the form, am I being too cautious?

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29th Nov 2012 18:36

You are not being too cautious.

I have had this argument with mortgage companies many times.

In the end they have all backed down 

Do not buckle to pressure – if other accountants are signing this type of statement I can only hope they have very good PI in place.

Sent the ICAEW standard reply and forget about it.s 

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29th Nov 2012 19:43

I don't

I do tax returns and accounts. I don't construct, in effect, personal balance sheets. Therefore I would not sign this and have refused in the past.

Some lenders take the p*** and try to get the accountant to sign their name to a wide variety of statements. Don't. Even if you come across as awkward. Explain that your insurance doesn't cover you for it. Professional negligence law can be draconian in its effect on YOUR balance sheet!

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29th Nov 2012 19:47

Future earnings?

If they are asking about future earnings instead of accounts that you have already prepared we have a standard method that seems to keep the client and the provider happy.

We ignore any forms, telephone calls or letters that require a standard reply from the provider.

We tell the client that we are unable to complete the request we have received.  This is often quite easy along the lines of "they have requested audited accounts, so I will get them audited for you, can I have an upfront payment of £5,000 and by the way they may not give it to you anyway" or "they expect us to confirm that you can afford to pay your mortgage for the next 15 years; can you provide me with the cash flows and projections to justify this.  If you do not have them I am happy to provide them to you for a fee of £xxxxx"

Once the client gets back off the floor we say "we will write a letter to the mortgage provider assuring them that we believe you should get the funding explaining that we cannot predict the future"

We then write the letter with the a disclosure saying we are not responsible for the future business success and conduct of our client and you cannot sue us.  We enclose the forms that were originally sent, these are completed as "refer to enclosed letter"

It seems to work the mortgage provider has the forms completed, the client gets a mortgage.They only send the forms if they are going to give the mortgage its a cover your arse exercise that is trumped by your cover my arse exercise.

Now to be fair I could see value pricing coming into this one instead of a fee for writing the letter.

 

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03rd Dec 2012 07:51

Thanks steve
Steve your reply was exactly the answer I needed!

We sent an engagement letter to the mortgage company, effectively saying we will get information from our client to support that they have more than £500k in net assets for the purposes of confirming they qualify for the exemption from the CCA and that's it, If they can't pay the mortgage that's not our problem.

It does make you laugh when they are all pushing you to sign this off - and when I started asking questions about the CCA as why this needs signing they came out with so many incorrect answers I nearly fell off my chair. One of the "brokers" involved said that second charge mortgages are not regulated by the CCA!

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By skhan
02nd Jun 2014 00:44

RTM Company

There is an RTM company and its uploading dormant accounts at Companies House.

Its collecting service charges and doing all maintenance expenses, but still showing dormant, which is not correct.

 

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