I can’t help feeling that I am not actually hearing anything new and I don’t feel we are really grasping the possibilities of what really lies ahead, as a market, in terms of the Financial Services Authority (FSA) and the implications of regulation. The industry needs to consider the affect of compliance and its bearings on mortgage intermediaries.
I fundamentally believe that the basic process of selling a mortgage is wrong, and, what’s more, it doesn’t fit in with the FSA regulatory rules.
Take the average intermediary, who is an appointed representative (AR) with a network and has a good relationship with a packager. The intermediary gives out the usual Initial Disclosure Documentation (IDD), carries out a factfind, and goes away to source a product. After doing this, the intermediary comes back and presents the findings to the client and hopefully signs the mortgage deal.
Now comes the first problem – sales people sell. They are not good at administration, and the people who feel safe in their offices who generally like administration usually become underwriters or compliance managers. It is difficult to get a harmonious mix as the intermediary now has to sit down and spend on average three or four times longer than he did pre-‘Mortgage-Day’ to put his mortgage application paperwork together.
Once the mortgage case is submitted it goes through a compliance pre-check of sorts before being bundled off to the packager or lender. Hopefully the case completes and the customer is happy. But, isn’t that somewhat like trying to shut the gate after the horse has bolted? What is the point of a network or mortgage brokerage paying thousands of pounds per year employing compliance managers and staff, along with integrated levels of sales management to monitor compliance, only to check it after the intermediary has given advice and sold the deal? Isn’t the point of regulation to ensure the client gets the best advice? Yet we only monitor it after the event.
Simon Helliwell
Senior adviser
Ultimate Mortgages
