The research was conducted on behalf of First National Home Finance Ltd (the successor to First National Mortgage Company) to assess the anticipated impact of the upcoming regulation of mortgage and general insurance products.
First National Home Finance, a GE Company based in Harrow, specialises in providing non-standard first mortgages and secured loans through intermediaries and brokers. The kind of support mortgage intermediaries expect includes; ongoing training, online support packages, information updates and compliance documentation. There is also a feeling among brokers that the greater workload anticipated post-regulation should be compensated by higher procuration fees.
First National, whose business is primarily delivered through intermediaries, conducted the research as part of its ongoing drive to raise awareness among intermediaries and others in the industry of the likely effects of regulation and what can be done in preparation.
An encouraging sign for First National was that some 70 per cent of its own intermediary database had already analysed the impact of regulation compared to only 50 per cent of IFA’s generally. Surprisingly, under a third (28 per cent) of respondents believed that the impact of regulation would be “significant”, whilst over 40 per cent thought it would only have “slight” or “little” impact.
Interestingly, whilst 90 per cent of intermediaries expect networks to emerge as a result of regulation, only one in three say they would consider joining one.
Looking to the future of their own business the most popular option was to become directly authorised by the FSA (63 per cent), although this figure fell to 45 per cent for sole IFA’s. Only 24 per cent of mortgage intermediaries planned to become an appointed representative of a lender, and just half of these had considered who they would like their principal to be. Whilst independence was a concern, the most common reason given for their choice was the cost of compliance (39 per cent).
Overall the research indicated that mortgage intermediaries are better prepared to deal with the impact of regulation than their counterparts in some other sectors, but there are still significant areas of weakness. For example, while 60 per cent of mortgage intermediaries questioned had decided that following regulation they would provide advice for a combination of fee and commission, only one in three (34 per cent) had reviewed the proposed disclosure requirements in CP 146.
Ron Howell, Director, Secured Lending Sales, First National, said: “The survey gives us some very positive feedback. I am pleased to see that many of our mortgage intermediaries have started preparing for regulation. This is very much in line with our recommendations at this stage. Regulation doesn’t kick in until October 2004, but there is a lot intermediaries can be doing over the next few months to prepare for it. A great deal of information is already available from the FSA, and intermediaries and lenders need to take advantage of it in order to shape their responses, work out what is best for them, and start planning for October 2004 as soon as possible.
“Our industry has seen great deal of change in recent years, and has generally responded very well, however, regulation could have the biggest impact yet, and ignoring the consequences is simply not an option.”
