The changes to the way the financial services industry reports its results may seem to have little impact initially on the way a broker will operate on a day-to-day basis.
However, Linda Will, managing director of Accord Mortgages, believes that the IFRS will have a significant impact on the way lenders do business; something brokers are not anticipating.
“Brokers think this is purely a lender’s problem but it’s a market issue which will affect the products they are able to offer both in the short and longer-term. Products will change as lenders look to construct deals which will bring about the best profits and neglect areas which look less attractive. There will be pluses and minuses in this but the playing field is changing and intermediaries need to understand this.”
One of the main differences, according to Will, is rather than lenders putting all their costs and reaping all their income at the beginning of the loan, these will be spread out over the life of the mortgage deal.
However, Paul Fincham, press officer at Halifax, believes IFRS won’t have much impact: “Competition and consumer demand are the determining factors when it comes to the products on offer. As a lender, we try to have products which meet both the needs of the market and the consumer and that won’t change.”
Mike Fitzgerald, sales director at Brentchase Financial Services, thinks lenders will change some of their operating methods. He said: “While it’s not too bad for mutuals, plcs have to concentrate on their shareprice so sometimes they will be more concerned with the City than the mortgage market. There is always the balance needed between profits and market share so you’ll see lenders dressing up their products to reflect this. However, if they put their rates up too much, they won’t get any business.”
