Well before ‘Mortgage Day’ there had been considerable media coverage regarding the decline in the importance of the role played by the packager. There was a belief that they were set to become a redundant part of the mortgage origination process as the majority of broker firms would join networks that would then control distribution and the packager would lose out.
Eight months into the new regulatory regime and nothing would appear to have changed; the argument is still ongoing and it is unlikely to go away.
In spite of all the uncertainty in the mortgage packaging arena, there were clearly opportunities that would arise from the new regulations and, if firms were prepared to adapt to these challenges, there would be a very healthy future for the quality packagers and a chance to move forward with a positive attitude.
No doubt there is likely to be further consolidation in the packaging sector
as lenders strengthen their links with the larger firms to secure distribution
of their products and smaller firms may be tempted to merge to provide
a service to rival the larger players.
Confidence
Lenders and intermediaries need to be confident that packagers can operate quickly and efficiently and do not raise concerns about compliance. It is true that packagers now have to demonstrate added value or even reinvent themselves as service providers for both appointed representatives (ARs) and directly authorised firms.
It is clear that many packagers who sought to protect their distribution by creating networks have found themselves in difficult positions as many of these networks have failed to meet with their regulatory business plans and are operating at a considerable loss.
Firms that have looked at opening their distribution channels, such as going direct to the public and seeking access to the panels of networks, have generally faired better.
Packagers do still have an important role to play in promoting lender’s products to their network of brokers. The successful ones will be those that can continue to manage distribution on behalf of the lender, and provide essential services to the broker firms. These include access to exclusive products and commission rates that they may not be able to otherwise achieve.
Alliances
RAMP has a membership of ten firms and as a result of being part of a regulatory alliance has been able to negotiate excellent relationships with its lender panel, which currently stands at around 17, with regular exclusive products being made available through the alliance.
I firmly believe that packager alliances will continue to increase their share of mortgage business as intermediaries and lenders continue to move towards quality packaging partners. As an example, RAMP has seen a continued growth in business volumes since regulation commenced.
A significant part of my role is to provide support to the individual compliance managers within each of our member firms, which is achieved through a combination of activities.
Recently all member firms have been subject to comprehensive compliance monitoring visits which are very much focused on how a firm would be judged if they were to receive a supervisory inspection visit from the FSA.
Code of conduct
All of our members have signed up to our Code of Conduct which was introduced well before 31 October 2004.
This reflects the standards that we expect firms to adhere to and covers all of the key areas of FSA mortgage and general insurance regulatory obligations including the Approved Person regime, senior management responsibilities, training and competence, complaints handling, succession planning and data protection, to name a few.
This Code is intended to provide lenders, brokers and all intermediaries dealing with a RAMP member with a compliance and quality assurance, and it is likely that this Code will be built upon in the coming months to increase minimum standards even further.
Senior management
Senior management is key to thesuccess of how a firm may perform should a visit from the regulator take place. We are about to address the fundamental areas of what really constitutes being an approved person and the level of responsibility that goes with the regime and what is expected from an FSA perspective.
There are a number of key areas that are actively being worked on including the development of a comprehensive policy for Treating Customers Fairly.
This can then be individually rolled out to our members to suitably reflect the area of their distribution where careful consideration needs to be addressed to ensure any potential area for customer detriment is eliminated.
Financial Promotions has been an area where RAMP has spent some time looking at the industry as a whole and the continued disregard for the new rules.
RAMP has recently completed a survey on intermediary advertisements and this continues to highlight the urgent need for the FSA to start to exercise its powers and commence disciplinary action.
Times will change
It is inevitable that times will continue to change and new challenges will be presented to us. It is only a matter of time before we are faced with new
consultation papers from the FSA and the impact that European regulatory integration may impose upon us.
One thing is for sure, there is never going to be a dull period. Our aim is to ensure that our members receive the highest level of compliance and regulatory support that will help to maintain the high standards currently being demonstrated and to continue the work with our lending partners.
