The study shows that the vast majority of intermediaries are familiar with the proposed rules and regulation, with 62% having already read the FSA’s Mortgage: Conduct of Business Sourcebook. Nearly all of the intermediaries questioned are up to speed on ‘responsibility’ issues but less so on ‘affordability’.
On the issue of Self Cert, intermediaries view it as a valuable product, with over 90% having used it in the past and 83% continuing to do so in the future. This indicates that Self Cert products will remain a significant part of the mortgage market in the future.
The study also revealed that intermediaries think that over half of their customers are not familiar enough with many fundamental aspects of the mortgage market. The particular issues highlighted were:
- Implications of remortgaging,
- Effect of interest rate increases
- Pros and cons of variable rate mortgages
This endorses the FSA’s move to regulate the industry, ensuring all intermediaries are able to offer the highest standard of financial advice to their customers including a comprehensive programme of customer education to enhance their knowledge and understanding.
John Maltby, IMLA Chairman says, “The results of this study are extremely encouraging. The fact that over 90% of intermediaries intend to continue in the industry post regulation is significantly higher than many industry experts have been predicting and will provide a huge boost of confidence to the industry as a whole and particularly to the intermediary. However, the study does raise some important questions, which need to be examined in more depth, particularly focusing on the issue of customer awareness.
“It critical that the proposed regulatory requirements are clear to use and understandable, enabling customers to access the appropriate information to make the correct choice.”
IMLA’s latest research was based on the term ‘Responsible Lending’, coined by the FSA in its final mortgage rules which come into effect at the end of October 2004. Responsible Lending identifies specific requirements surrounding mortgage advice. Through the study, IMLA sought to gauge the intermediary’s awareness and understanding of the proposed regulation and topical industry issues.
This study was taken from a cross section of mortgage intermediaries including mortgage brokers, IFAs, Company Representatives and others operating in the UK mortgage industry.
More information can be viewed at the IMLA website www.imla.org.uk
