Mark Lofthouse considers the results of a recent Mortgage Brain survey and looks at who supported intermediaries through compliance
When compliance came along everybody in the industry was trying to predict what the biggest stumbling blocks of ‘Mortgage Day’ would be. When the pressure of mortgage regulation mounts and problems arise it is typical for one person to blame another person who then blames somebody else who in turn blames the first person.
The fact is, nobody came through unscathed from the backlash of regulation; however, some reputations have been less affected than others.
Mortgage Brain recently carried out a survey among our directly authorised (DA) and appointed representative (AR) customers to find out, from the intermediary’s perspective, who had best prepared for regulation and who has best helped them through the changes since ‘Mortgage Day’.
Preparation is the key
In order for any company, in whatever field, to be able to give good service to its customers, it needs to do its best to be prepared.
Would you expect to be able to tackle the black run on the biggest mountain if you’d only been to a snow dome once before? Of course not, and it is the same for supporting brokers though regulation.
It has been discussed previously, in all of the trade media, that a lot of intermediaries were not fully prepared – while this was obviously not ideal, it compounded the problem.
To get the brokers compliant in time required companies and organisations such as the FSA, sourcing systems, networks, AMI and lenders to make sure they were prepared for regulation in order to give them the support they required then, now, and in the future.
We questioned intermediaries about their feelings on key areas such as readiness for compliance, the introduction of regulation and their views on Key Facts Illustrations (KFIs). So what did our survey reveal?
Survey results
The FSA was rated as ‘poor’ by 28 per cent of brokers while a different 28 per cent rated it as ‘good’ or ‘excellent’. The regulator was also ranked as the least supportive organisation.
When asked who they felt they could rely on the most only 28 per cent stated they relied on the FSA. Networks scored highly, especially with ARs.
The results suggest a wide variation in the support given by companies to brokers. The FSA has introduced these rules and regulations for the benefit of the consumer, and rightly so. However, the average intermediary clearly believes its needs have not been fully met.
When asked what our users thought about the introduction of regulation, there was a mixed response. Over 63 per cent of intermediaries believed the introduction of regulation will hinder their business in 2005 as they come to terms with all of the new business practices.
In spite of this, intermediaries believed regulation was going to have a positive impact on the mortgage industry as a whole. 75 per cent said the introduction of regulation will prove to be a good thing for the mortgage advice industry.
Intermediaries agreed regulation is needed with 61 per cent saying it will be a good thing for the consumer and 53 per cent believing it will improve the image of financial advisers in the eyes of the consumer.
Having a positive and improved reputation can only benefit intermediaries but image is not the only thing. A broker’s reputation is lost if it can’t deliver when it comes down to the crunch of advising its client on the best mortgage for them.
The list of regulation concerns runs longer than my arm but at the top of the list is KFIs. They have been discussed and analysed to death with everyone having an opinion on the accuracy of information to the length of the documentation – something that Mortgage Introducer has openly campaigned against.
69 per cent of intermediaries said they believed their customers think KFIs are unclear and difficult to understand.
The vast majority, 75 per cent, believed KFIs are too long and 85 per cent thought there should be a limit to the number of pages a KFI can run to.
There is really only one organisation that can do anything to change the length and content of KFIs and that is the FSA.
However, it seems there are organisations that have made an impact by helping the intermediary generate consistent and compliant KFIs and they are sourcing systems. The increase in complexity following regulation has led to 74 per cent of brokers increasing their use of software.
It doesn’t take a brain surgeon to realise many intermediaries and companies are still very unhappy with the repercussions regulation has had on the industry and the influence it has had on the way they go about their business.
There are key areas that need to be addressed and as I have already said only the FSA can change the rules.
Mark Lofthouse is CEO of Mortgage Brain
