Affordabilty Certificates for banks

Affordabilty Certificates for banks

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A partnership client has applied for a mortgage and I have been asked to complete an Affordability Certificate for the prospective lender. One of the questions asks me to confirm that the business is solvent and likely to continute trading as a going concern for the foreseeable future.
I felt unable to do this, especially as I have not looked at the books since year ended 31 May 06 and therefore signed and sent back the form indicating that I had no evidence on which to make a judgement. The client is very unhappy and has sent me a p&l from Sage assuming that would fill in the missing information. I contacted the Technical desk at the ICAEW for an opinion and subsequently reworded my reply, including information about P&L for the past 3 years, but not expressing an opinion still.

Client is pretty livid and I am likely to lose him - not a great loss but I would welcome any advice / experience others have had in completing these forms for future reference - it seems to me that the banks are trying to offload some of their risk - or am I being overcautious?
AC

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By User deleted
30th Apr 2008 09:41

Conversation & Commitment
I would be concerned at receiving such a letter from a lender. It would appear that they may be trying to create a liability on our part.

Certainly it is wise to have the discussion with the client before responding to any of these requests, not least that they are instructing us to submit information to the lender.

Most clients are reasonable when we explain what we can and cannot say, and why.

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By User deleted
29th Apr 2008 08:48

Thank you - your comments have been extremely helpful and have reinforced my initial 'hunch' about these letters. My client is pleading for me 'not to let him down' and I suspect I will lose him, but it is just not worth the risk in my view.

Amazingly having never been asked to complete one of these things in 6 years of being in practice, I have just received a second this morning!

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By User deleted
28th Apr 2008 16:32

mortgages
I agree that an opinion can only be given on some sort of factual evidence. I assume the client didn't want the expense of you preparing management accounts so therefore no opinion.

I have been asked to prepare a forecast for a re mortgage and quoted a high fee explaining to the client that this is considered HIGH RISK work. Indeed any forecast would be qualified by quite a lot of assumptions on which the forecast is based. The client hasn't come back to me on the subject and probably like yours is agrieved, but there is not much that can be done about this.

You are right. If it all turns sour the bank will sue anyone to recover funds.

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