Dear Sir
The FSA’s recent criticism of mortgage sales is a wake up call to the industry. No matter how good or experienced the adviser, the plethora of products now available and the volume of business which is done require a superhuman to keep track of everything.
Only through the use of strategic compliant point-of-sale technology can organisations take some of the burden from the shoulders of those who sell Mortgages. So many organisations scraped a solution together to achieve M Day compliance and then just stood still, often for valid reasons of cost or pure resource bandwidth.
I believe that sellers of mortgage products will place more and more emphasis on the technology made available to them to sell, when deciding where they work or what network to join. This is not just in terms of tools to win business but also the ability to leave a tangible audit trail of a compliant sale.
Its fine having facilities to use at various stages of the sales process but more and more the importance of it all being joined up in the world of sales and compliance comes to the fore.
Yours faithfully,
Steve Jones,
CEO, N4 Solutions
Trial by TV for PPI
There’s nothing quite like prime time TV exposure to focus the concentration, and I expect last Friday’s Tonight With Trevor McDonald to have massive implications for the sale of payment protection insurance (PPI).
The major banks, who the FSA consistently shies away from naming and shaming for their mis-selling activities in this market, now have to face up to the fact that the consumers themselves are well and truly in the loop and armed with sufficient information to sniff out profiteering in an instant.
The revelation on the programme by money saving expert.com’s Martin Lewis that consumers who shop around can secure payment protection insurance at one tenth of the cost of those who don’t is guaranteed to result in some very red faces on the branch staff at High Street lenders.
The publicity should enable mortgage brokers who become familiar with the new age-related products and other innovative PPI formats to capture a huge chunk of the market from the major mortgage lenders.
As Eurfron Jones, head of consulting at Huntswood, said in his company’s recently released payment protection insurance report: ‘Winners in the new protection market will be those who minimise the impact on sales by rapidly redesigning products and processes and re-establishing confidence for their customers and the market.’
The role of the media and the extent to which it should be allowed to intrude is currently a hot topic, but we have just witnessed a brilliant example of how media scrutiny can improve the lives of millions.
Our regulator clearly doesn’t have the bottle to hand out to the banks the massive fines they deserve for their mis-selling activities, so we should all be grateful that national TV has the power to fulfil a much needed policing role.
Yours faithfully
Sara-Ann Burgess
Director
British Insurance Limited
This weeks news from the FSA is not good but hardly surprising. The FSA has revealed that only one third of mortgage firms have robust processes in place to provide customers with suitable advice – with smaller firms yet again coming out the worst. In the worst cases some of these firms and sole traders have faced costly enforcement action. Rather than wield the axe the FSA needs to provide a lot more support for small firms and sole traders – because the level of complexity operating as a mortgage broker is simply beyond the resources that many possess. No doubt the usual band of doomsayers will be on the bandwagon pointing a finger at those naughty mortgage brokers – but without the sole traders and partnerships in existence the UK mortgage market would lose 40 per cent of its distribution capability and that means less choice and accessibility to advice for consumers – much less. That’s not good.
The FSA reviewed 252 firms of differing sizes through mystery shopping, visits and questionnaires between June and October last year. But how much is really shared by the FSA with the broker community about what is good and bad practice? Whilst the need for privacy is understood there is nothing stopping the FSA from sharing best practice processes and systems with the identity of the broker preserved. The cynics of course would argue that the FSA has not done this case something they hold up to be good comes back to bite them. The FSA is still feeling its way on that front, and so too is the broker community.
Let me dwell just a minute on the sheer complexity of mortgage broking in a regulated market. The Handbook is nine and a half feet thick. We now confront a typical remortgage client with over 120 pages of documentation – much of it legal mumbo jumbo. Ever tried reading remortgage and typical cross sale contracts cover to cover? Anyone with insomnia will be cured instantly. Marketeers tell us that the average customer will read no more than an A4 page, yet somehow a straightforward remortgage has ballooned out to 120 pages. Treating Customers Fairly? Clear Fair and not misleading? How would they ever know – unless they read it all.
This complexity is made even worse by the individual nuances of every lender, and their specific compliance requirements.
So Mr Sole Trader – what chance does he really have to get his paperwork spot on? He has probably generated a lead from a non-compliant advert, but he has done his misguided best on that front. He sources a deal from a typical mortgage sourcing software provider- and is confronted with thousands of choices. Of course if he had a Compliance Officer he could refer any questions to them! But compliance resources don’t come cheap. We have a team of six in our Compliance department at blackandwhite.co.uk including a full time policy officer – whose sole job is to interpret FSA regulation.
Of course the FSA has every right to be concerned that lack of appropriate processes in the small broker sector poses the risk of unsuitable advice. But let’s keep things in perspective. We desperately need to protect this sector of the mortgage broker market.
As stated earlier the doomsayers will be on the bandwagon. But in my humble opinion the FSA could do a lot more to help the little guys. Road shows are great if you can shut down your one man mortgage broking office. Indeed, you could barricade the door successfully with the FSA handbook – nobody would get in! Some of these seminars are out of reach because of the geographic location ie Canary Wharf or quite costly for the one man band – £250 – £600, and more, plus loss productivity – it becomes an expensive day out. The FSA website is also tough to navigate, very tough. Come on FSA how about sharing some ‘real live’ no names best practice? Or how about some roving FSA Liaison Officers? (Think community police rather than SWAT). There is certainly a real intent to get it right, but like our customers mortgage brokers in all sectors are struggling with the complexity and sheer volume of paper that is a regulated market.
Thomas Reeh
Chief executive officer
Blackandwhite.co.uk
Its all well and good advising FTB`s to get a fixed rate but then major players announce they MAY have to pull fixed rates due to lack of funds!! Was this all planned to push people onto trackers/discounted or variable rates?
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