-More see a decrease in profitability, compared with 100 days on from regulation
- Three in four say the job has become more difficult
Brokers are still painting a picture of decreased profits and frustration one year on from M-Day. Findings from an Alliance & Leicester Mortgages independent broker survey show that more brokers are experiencing decreased profits compared with 100 days into regulation (58% now report this compared to 44%).
The research also shows that over half of brokers (51%) are still spending more time on maintaining business levels and more brokers (53% vs 47%) now say that Key Facts Illustrations (KFIs) do not provide a real benefit to customers.
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester said: "Previous research by Alliance & Leicester into the effects of M-Day showed that brokers were struggling 100 days after regulation, especially with sustaining profitability and dealing with a more lengthy sales process. It is clear from our research findings that a year on, brokers still have some genuine frustrations and many are still experiencing problems.
"One year on from regulation and maintaining levels of profitability remains challenging for many brokers. Our research has gone some way to track broker sentiment on regulation and indicates that more brokers believe it has negatively impacted the profitability of their business."
Increased turnover needed to maintain same business levels
Over half of brokers (51%) say they need to increase their turnover in order to achieve the same level of profitability they enjoyed pre-regulation.
This compares to 47% of brokers 100 days into regulation. Interestingly, of those in the Midlands only a third (33%) felt this way and indicated that they need to increase their turnover. Conversely almost two thirds of those in the South (62%), feel they need to work harder for the same level of profitability.
Sales process takes longer
Over eight in ten brokers (81%) feel the sales process per mortgage application takes longer post-regulation with nearly half (49%) saying that it takes one and a half hours longer than it did before.
The job of a mortgage broker is harder since regulation
The majority of intermediaries (77%) feel that being a mortgage intermediary has become more difficult since regulation. The research suggests that Appointed Representatives find it the most challenging with 82% saying it is more difficult compared with 72% of those who are Directly Authorised.
Directly authorised vs appointed representatives
A year on from regulation and Appointed Representatives (ARs) seem happier with their chosen route. Previous research conducted after 100 days showed that 54% of ARs felt they’d made the right decision. This figure has now grown to over four in five (82%) today. However, those who are Directly Authorised seem happiest as over nine in ten (92%) of this group felt they’d made the right decision.
KFIs and IDDs
Positively, over two-thirds of brokers (69%) feel that Key Facts Illustrators (KFIs) and Initial Disclosure Documents (IDDs) play an important part in the regulated environment. However, a significant third (31%) feel that they do not because:
-Customers find KFIs and IDDs too confusing
- Customers do not understand their purpose and is of no benefit to them
- Customers find KFIs are too long
Over a third of brokers (38%) say that KFIs are helpful for customers. There seems to be regional divides however, with 52% of brokers in the Midlands saying KFIs are beneficial for customers while those in the North are more sceptical - only 28% of brokers in the North agree. The majority of brokers (53%) feel that KFIs are proving to be of no real benefit for customers.
Other findings reveal:
- More than eight out of ten brokers (87%) feel they are spending more time on compliance and administration post mortgage regulation.
- 60% of brokers now spend more time talking with customers.
- 77% of brokers feel the extra cost of ensuring compliance has affected their business.
