There is a nagging doubt in my mind that says that there will be a large number of intermediaries who have not prepared properly for Mortgage Day and will be in for a real shock when it comes.
If you have prepared properly, you should be able to minimise the hassle when you turn up for work on Monday 1 November. Be under no illusion though, the new regulated environment will require fundamental changes to the way in which you transact and conduct your business. Even for the best prepared there will still be issues to overcome, although these can be minimised.
Regulatory status
As a mortgage intermediary, you will hopefully have got the biggest hurdle out of the way a long time ago - choosing your regulatory status. If so, you will already have been authorised by the FSA or approved by your chosen network to become an appointed representative (AR). You may even have chosen to introduce to another regulated firm, or to leave the industry altogether.
If you are about to join a network, I would strongly recommend that you do a last minute check on contractual terms, service and quality support levels, mortgage support and expertise and financial backing before signing anything. If you transact a fair amount of mortgage business, it makes sense to double check that your chosen network has access to some of the best deals on the market, i.e. through packagers, etc as their relationship may change after regulation.
If you have not made a regulatory decision it is unlikely at this late stage that you will be in a position to trade legally from 31 October, ‘Mortgage Day’, as the time to apply and get authorised – even via a network who have the capacity to drop everything - is likely to be too tight when you read this.
So, for those who have left it late, what should you do? I would recommend that you act immediately and seek advice from a number of leading firms and associations, the Association of Mortgage Intermediaries (AMI) being a good starting point. You can then organise your future regulatory status and transitional arrangements while you are unable to conduct business.
For those who are already authorised, I would suggest that a good starting place to ensure that you have covered all of your transitional arrangements would be AMI’s fact sheetnumber 14 ‘Regulatory Checklist’. This has a list of different areas to check from that includes sections on internal controls, customer-facing, complaints procedures and training and competence.
Practical issues
But what about the more practical issues you are likely to face during transition? Firstly, all stationery, advertising and promotional materials including transactional paperwork will need to change in line with FSA requirements, so a good clear out will be in order! Your sales (and business) processes will have changed to ensure you now follow new procedures and for example having a compliant initial disclosure document (IDD), a key facts illustration (KFI) and so on. You will know whether you offer ‘independence’ and all that that implies, you will have a compliant complaint process as well as ensuring that your customer database is kept properly and so on.
If this sounds daunting then you will need help as this is just scratching the surface of FSA regulation. Companies like Pink Home Loans, Mortgage Intelligence and Mortgage Next offer compliance support for both directly authorised and AR intermediaries and these and other firms can offer support.
Another transitional issue to consider, assuming that your business processes are in order, is re-registering (probably including all of your business writers) with lenders and distributors to enable you to continue to do business with them. Make sure you beat the backlog by doing so as soon as possible.
Creating a compliant KFI is an issue of great debate presently as lenders are reluctant to guarantee any other than their own. This places a question mark over sourcing system KFIs in the short-term. In addition to the registration process, this is an area where company’s like us can save you time as they can access the large amounts of lender websites in a central place. Major distributors are also in a great position to help post regulation with KFI advice as we deal with the majority of UK lenders.
Regulation is certainly speeding the electronic revolution and if you are not a computer lover then now is the time to fall in love. As an example, BM Solutions are transacting business chiefly electronically and the benefits are there for the intermediary as well as the lender. For those that still use paper-based applications remember that you will need new application forms.
The benefits
There are some advantages to regulation. The FSA has introduced mortgage regulation to benefit the consumer, and guess what, they don’t know its happening. This gives you a great PR opportunity – get your mortgage regulation story in your local paper now and get yourself some publicity on the back of a good story.
If you have a service ethos embedded in your business then mortgage regulation is just good business practise and with the intermediary market likely to be getting smaller over the next few months now is the time to be investing in growing your business.
Mark Howell is marketing manager at Pink Home Loans
