Whichever way you cut it, the mortgage intermediary sector is still predominantly comprised of small firms. These local businesses are the heartbeat of the industry and are often one and two-man bands providing a professional service to clients who keep coming back. For these firms the major focus is servicing their existing client base while ensuring the business remains profitable.
Of course, life would be a lot simpler if client issues were the only concerns a mortgage intermediary business had to contend with these days. This is far from the case. Indeed, it is probably a full-time job in itself ensuring the business is Financial Services Authority (FSA)-compliant. With the concerns of regulation also come the ever-changing nature of mortgages, brokers must be up-to-date on research and the raft of developments that regularly hit the market.
All these issues mean that the average broker is ‘time-poor’ and there could be a danger that the firm feels somewhat isolated. This is where joining a trade body could be a good move. The temptation is to use this article as one long advert for the Association of Mortgage Intermediaries (AMI). It’s a temptation I will resist but when you consider that there is only one broker trade body with a dedicated executive team lobbying on the industry’s behalf and issuing a wealth of information to its members, you won’t be surprised to learn that the focus of this article is predominantly on AMI.
A two-fold role
Firstly, it’s important to understand what a trade body does not do. AMI does not provide training or qualification services, we leave this to the professional bodies such as the Chartered Insurance Institute (CII) and ifs School of Finance. Our role is essentially two-fold. Firstly, at a high-level we lobby those policy makers and decision takers who shape the industry that intermediaries work in. This means that we meet with the likes of the FSA, the Office of Fair Trading, HM Treasury, and increasingly the European Commission, to influence and help shape the policy and legislation that will impact on your ability to do your job.
The people who work at these organisations are not intermediaries, they are civil servants, but it is these individuals who have enormous influence over the way you do your job and run your businesses. Our lobbying role is to influence the decisions they make, to shape the policies they write and to ensure that the voice of the mortgage intermediary is heard at the highest levels. In producing their policies, these organisations are often not aware of the potential consequences of their actions. We ensure they are aware of the impact – often negative – that these potential regulations will have on our members and have been successful in changing the proposed rules and in many cases, seeing them scrubbed completely.
In carrying out this role, a trade body has to come to a decision about how it wants to influence an organisation. Some trade bodies seem to opt for ‘all-out warfare’, criticising everything a particular regulator comes out with in the hope that if they throw enough mud, eventually some will stick. The number of times I have heard calls for Canary Wharf – where the FSA has its offices – to be burnt to the ground are too many to count. But, in opting for this line of attack, the trade body and its members must be prepared for short shrift and limited success. Regulators do not often take kindly to constant bombardment and we believe this to be a particularly limited way in trying to influence policy decisions. After all, would you want to sit down and discuss issues with a body you considered to be the enemy?
Seeing the bigger pictu
Our approach has always differed from this. We believe the best way to influence is to actively engage with the regulator. This means that we do not criticise just for the sake of it. Where we fundamentally disagree, we will say so but we also provide information, conduct research, initiate discussion, and actively contribute to the debate. This has resulted in the organisations listed above actively seeking out AMI’s contribution before the regulations are set in stone. Obviously, forewarned is forearmed and through this early sight of key documents and policies we can shape the agenda and the regulation before it has got anywhere near its target market– the mortgage intermediary.
This strand of trade body work is all about seeing the bigger regulatory picture. We appreciate that our members are often busy with the day-to-day aspect of running a business. In joining AMI, firms can hand over this ‘wide view’ to us – we will keep them informed of any developments on the horizon and hopefully stave off any potential negative impact.
For instance, the European regulatory agenda is huge and growing all the time. Most UK mortgage intermediary firms are not constantly reviewing the output of the European Commission on mortgages but we, as your trade body, are. Not only are we reviewing and responding to mortgage-based policy work and directives, we are also looking at the bigger picture to see if there is any potential read-across that could affect our members. For instance, the recent Markets in Financial Instruments Directive (MiFID) was not supposed to have any impact on mortgage intermediaries – our members were apparently ‘out of scope’. We feared otherwise, and it soon became clear that the way FSA would implement MiFID would have an impact. We therefore began to influence and respond on the contents of MiFID and there have been changes to the Training & Competence (T&C) regime and complaint handling which affect broker firms as a result of MiFID. It is a trade body’s job to spot these impacts and inform regulators and members of the consequences.
Provision of information
This lobbying function is just one part of the trade body’s role. Our smaller member firms especially are looking for much more and this is where we take the provision of information to members particularly seriously. I mentioned that many firms are ‘time poor’ but the fact is that in the highly regulated market we function in, time has to be spent on compliance with rules. That said, the FSA’s MCOB rules are not the easiest of reading and firms often want help in turning the rules into business practices. This is where a good trade body will come into its own.
We provide members with newsflashes, factsheets and updates on a variety of issues. The idea is that we lead the horse to water. Our information is written in plain English and designed so that firms can either become clued up on a particular issue or put into place business practices that will help towards their ongoing compliance. At the end of the day, it is up to the horse to drink, but we feel through our provision of information we are at least putting the water in front of our members.
Key areas that we have focused on over the last six months include; the FSA’s ‘Treating Customers Fairly’ (TCF) initiative; T&C; and retention business – more lenders are offering retention proc fees if the broker keeps their client with the lender – AMI has produced information on how to handle this type of business.
This year we have also branched out into economic data – our Quarterly Economic Bulletin gives a run-down of the most up-to-date economic data while also focusing specifically on the housing and mortgage market. This gives firms a view on where the markets may be going and underlying reasons for any future changes – it can be useful information not just for the broker but can be passed to the client to inform their decisions about their mortgage.
Groucho Marx once famously said: “I don’t care to belong to any club that will have me as a member.” As your trade body, AMI is certainly a ‘club’ you should want to join and we will gladly accept your membership. Trade bodies are all about presenting a united front. It is through a trade body that an industry can define itself and grow – those brokers who are not members are doing the entire sector a disservice. AMI currently has approximately 18,000 members – it is a simple fact that the more members we have, the stronger our voice; the stronger our voice, the more we can deliver. It is up to you to decide if you want a quality, professional, trade body or if you would prefer others to make decisions on your behalf that are often not in your best interest. mi
