This week I start my coverage in the world of ‘Treating Customers Fairly’ (TCF) and the apparent lack of awareness in the broker community about its implications. MI highlights research from Mortgage Next; just one in 15 small directly authorised brokers are aware of the March deadline to begin implementing changes in their business to meet TCF outcomes. It seems from the research that many brokers believe their existing systems and processes are robust enough to give evidence that a TCF strategy is in place. As noted in MSL, the FSA has again warned the financial services community to clean up their act, saying that many do not work well for consumers and many had much to do to meet the TCF deadline of 31 March. Sarah Wilson of the FSA, speaking at its conference, highlighted concerns that controls were poor in two-thirds of cases in its thematic work.
Looking to the States
It’s also not often that I look to the US for information but it can be a useful indicator of future financial trends. Both MSL and MM highlight a downturn in the US market for non-conforming lenders, with a report stating that non-conforming poses the greatest risk to domestic financial markets. MM highlights the reduction in house price growth and small increases in interest rates as the trigger for the non-conforming market to go sour.
Postponing the packs
Also in the news is the call from the Council of Mortgage Lenders (CML) to postpone the launch of Home Information Packs (HIPs) until they have been thoroughly tested, as reported in FA. As we would all agree, the house buying process has been slow but the CML suggests the introduction of HIPs will not speed it up nor address the fundamental problems. Indeed the CML highlights more proposals being made to change the format of the HIP just four months before full implementation.
There is also the confusion over the Energy Performance Certificate (EPC), reported in MSL. While the EU directive to which the government is working suggests an EPC can last up to 10 years, the government will require a new certificate to be produced each time a property is placed on the market which will increase costs to the end consumer. If you are like me, you will still be trying to gauge the impact of HIPs on the housing market and especially the broker. Indeed if you look at the number of anticipated qualified individuals who can carry out the EPC, it is difficult to see how the market will not be impacted by HIPs.
Repossessions
I was interested in an article in MM on the growth of companies who are targeting those people threatened with repossession. These companies offer to purchase homes that are at risk, at 20-25 per cent below market rate, and rent the property back at market rate. Aggressive advertising could lure borrowers into this type of rescue package when they still have an opportunity to negotiate with their lender, resulting in a loss of equity. There are policies available that can protect customers and there is a clear need for the broker to explore the best course of action.
There is also a lot of coverage on the launch of Godiva, Coventry’s new specialist lending arm. This launch again highlights the market potential for the non-conforming sector and how, with much industry comment from a number of publications, this sector is becoming an even more crowded and competitive arena.
Packaging and exit fees
It also seems the packaging market is alive and well following research in MS. 90 per cent of brokers researched by Mosaic Mortgage Club would rather access non-conforming products via a packager than go directly to lenders. Expertise and high levels of service were the two key reasons for using packagers along with speed and high conversion rates. Nigel Payne in MSL, reveals the packaging market has grown by 30 per cent since regulation to around £30 billion. Expertise is key in terms of what information a packager knows is required to place a case, and this is where the valuable resource can pay dividends.
Finally, it seems that consumer power has prevailed in the debate over mortgage exit fees. MM reports that the vast number of current customers will now not be charged more than their contract originally stated, with most lenders signing up to that pledge, following a crackdown by the FSA. MM spoke to 20 top lenders and apart from Britannia, Kensington and Portman, all promised that they will charge the exit fee the client originally signed for. But it’s clear that this debate will continue as some lenders think exit fees shouldn’t be charged at all, but this stance seems limited to those lenders not operating in the broker market. If you add this debate to recent calls by some politicians that equal prominence should be given to arrangement fees as well as pay rates when promoting mortgages, the pricing of products is going to be in the spotlight even more over the next few months. mi
