Toni Smith is sales and operations director of First Complete
With the increasing focus on the MMR in the run up to April, it has got me thinking about just who will end up with the final bill. After all, it’s not like the FCA has a budget pot for each lender, network and broker firm to implement the not insignificant changes that the MMR will entail.
The MMR is all about consumer care, fair advice and transparency which no one can dispute is a great aim, but it requires a complete revamp of every lender’s process with significant knock on implications for brokers.
Lenders need to review and significantly adapt their processes and as a consequence all advisers – both in-house and brokers – need to be re-educated; but all of this costs, so who foots the bill?
Will we see an increase in product pricing or arrangement fees? Or will the lenders’ own marketing budgets be reduced so that they place fewer adverts and have fewer television and branch campaigns? Maybe lenders will reduce the amount of literature they produce, reduce their sponsorship or cut the marketing budget for networks and mortgage clubs, but who loses out if this happens?
Ultimately it will be the consumer who pays.
If a lender charges more that costs consumers directly or if they cut marketing budgets the consumer will pay indirectly with less information going to them either directly or through brokers.
There is also a likelihood that BDMs will have to be taken off the road to help with MMR implementation, which will mean less support for advisers and if advisers lose out on valued support then the consumer also loses out.
Some budgets cannot be cut – networks, for example, have a regulatory commitment to train brokers and lenders have a similar requirement to train their own advising staff many of whom have never before been qualified to give advice. It is a requirement that a broker understands the criteria and product details of every lender that they work with, therefore it will be crucial for lenders to keep networks and their brokers continually updated and ensure all of their information and product details are transparent. If a marketing budget is slashed then there is more chance of a broker not having the accurate information in a timely manner.
Let us not forget that the whole reason for the MMR is consumer transparency and clearer advice, but it is increasingly clear that the consumer will have to pay for it.
