The solutions company is warning mortgage firms that 'Mortgage Day' in October 2004 is just the tip of the iceberg and that based on the experience of the life and pensions industry they will be subjected to increasingly tighter regulation over the next few years.
The claim is based on a study of the total volume of Consultation Papers issued by the FSA vs the consultation papers specific to the mortgage market over the past 7 years. The research showed that, if the mortgage market follows the same trend as the already regulated market, mortgage firms will have to deal with an accelerating pace of regulatory papers over the next few years. Each set of new regulations is likely to necessitate further changes to business processes and IT systems in order for firms to remain compliant.
Mortgage firms must ensure that the processes and systems that they implement over the next 12 months in preparation for 'Mortgage Day' can be modified quickly and cheaply in future years to keep pace with regulation. If they fail to keep pace with legislation and break the rules, the costs incurred could be crippling in terms either of continual systems and process changes or in terms of fines and compensation.
The costs incurred by the life and pensions industry over disclosure have been estimated at £250 million and the costs of non-compliance are a matter of public record: £11.8 billion compensation paid out under the Pensions and FSAVC reviews on top of the £2.1 billion administrative cost of undertaking the reviews themselves.
Phil Heaton-Jones, head of mortgage product management and consulting at Marlborough Stirling, comments:
"History indicates that Mortgage Day will be the tip of the iceberg. Lenders and distributors must be aware of this danger as they prepare their processes and systems for regulation. Once the initial tranche of regulation has been effected further tranches are likely to follow with increasing frequency. The key is going to be the flexibility of the processes and solutions implemented for Mortgage Day and their ability to cope with future change."
