There is a lot that can be said about the over-use of ‘management speak’ in today’s business world. Every middle-manager and his dog has a lexicon of phrases to hand, for example, ‘touching base’, ‘blue sky thinking’, and ‘running ideas up flagpoles’. They seem to come out of a twilight zone where it’s not the done thing to actually say, ‘what ideas do you have?’ or ‘can we get this done?’
One phrase which I don’t believe can be placed in the bin marked ‘management speak’ is ‘seeing the bigger picture’. It is very easy, whatever field you work in, to be so wrapped up in your own responsibilities or your own company issues not to ‘look around you’ and take note of what’s going on and where things may be heading.
Of course, this is exactly where AMI steps in; your membership ensures that you are kept informed about market issues which may affect your business. But increasingly AMI is looking at the issues that emanate not just from the UK, but come to us via the wider European agenda.
A wider scope
It will be apparent that the European Commission now takes a major interest in what we do and with over 70 per cent of all regulation coming from Brussels, we must take an equal interest in the various Green and White Papers, and directives that have a lasting impact on UK markets.
One such EU Green Paper, which AMI has recently submitted its response to, was that on Retail Financial Services. This paper was published as part of the Commission’s review of financial services and should be read in conjunction with the proposals that will come out in its White Paper on Mortgages.
This particular Green Paper was designed to give the Commission an understanding of the problems that are currently faced by consumers and the industry in the retail financial services field. Again, the focus is on further integration between EU member states with the Commission expanding on its belief that the integration of EU retail financial services could bring benefits for consumers.
Of course, whenever the Commission publishes such a paper, our overwhelming concern is how it will affect brokers and the market they work within. In our response, we highlighted the pivotal and important role of the broker within the UK financial services sector. We sought to demonstrate how the broker is valued, indeed with over 70 per cent of all UK mortgages emanating from AMI members, the UK interemediary’s importance grows daily. The UK broker sector plays a critical part in helping people get the most suitable mortgage for their individual needs; on a wider playing field it drives innovation and provides a significant distribution channel for any new cross-border market entrants.
We are also concerned about any possible rush to further regulation. The UK financial services market is particularly advanced in comparison to our European neighbours and given that we are also subject to some of the most sophisticated regulation, we feel it is important that the Commission learns from the successes of the UK market.
Number of concerns
Overall we are pleased with the general tone and the objectives of the Green Paper; however, there are a number of concerns which have been raised. For example, the issue of cross-border lending and the consumer appetite – or otherwise – for this.
We believe there are two main reasons for the absence of cross-border providers. Firstly, we believe the current lack of credit data is the single largest factor stopping lenders and brokers accurately assessing risk for cross-border consumers. The Commission should take seriously the threat of fraud and its potential cost, and it should be mindful of the potential impact this will have on consumer confidence. Credit data must be securely managed and the Commission must ensure that all credit bureaus operate to the highest standards. Without this, cross-border lending cannot be a reality.
Entwined with the issue of the lack of credit data is the uncertainty that there really is significant consumer appetite for cross-border lending. Other factors such as currency risk, language, taxation and social welfare difficulties will all impact on the potential for cross-border lending.
Diversity
Looking at so many diverse national markets, and attempting to draw out common features which will justify a common approach is dangerous. In our letter to the EU internal market commissioner, Charlie McCreevy, we pointed this out and emphasised the diversity of EU retail financial services markets, and that companies need to tailor their services to these markets.
We have encouraged the Commission to continue focusing on consolidating and improving the application of existing legislation in these existing markets. We are against any new proposals for more regulation as it will mean change, cost and uncertainty for AMI members. That said, there does seem to be a growing move towards EU-wide regulation for credit brokers. This being the case, mortgage advisers and those lenders who rely on them for business must now address these issues or the regulatory regime will move away from us.
We must look up and see the big picture. The industry’s destiny is being decided right now. Industry wide issues require industry wide resource and we urge all stakeholders to join us in helping decide the future of our market.
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