“What the Papers say” … a review of regulation
MM(1) quotes an RBS spokeswoman who says: “Currently we do not participate in the non-conforming market. Like all areas of the market, the strategy is reviewed on a regular basis to determine whether the current offering meets our customers’ needs.”
On the same page, the Financial Services Authority (FSA) says it is nervous about the results of its investigation into the effectiveness of non-conforming mortgage regulation. The regulator will look at its policing of the equity release and non-conforming markets next year, areas that it classes as risky.
MI carries a feature article on the need for intermediaries to provide a clear audit trail in the wake of affordability based lending moves. Alan Lakey of Highclere Financial Services says: “It is strange to think that if you have a client with a perfect payment record and no bad credit that you end up putting them into a non-conforming mortgage.” The situation in question is a client who requires a high income multiplier and a non-conforming lender provides the best rate.
Lakey continues: “Companies like First National were thought historically to be only applicable to the bad element, those who were unable to prove income and pay debt. But when a slightly adverse mortgage comes out ahead of prime deals, it doesn’t matter what the lender calls it. If you remove the stigma of the name, what’s important is whether the deal is right for the client.”
The thrust of the article is that documenting evidence is crucial, especially if clients appear to fit into the mainstream category but it is a non-conforming lender that is willing to lend.
“This article touches on the very important subject of best advice for mortgage applicants and is symptomatic of the growing convergence of lenders. Mainstream lenders such as Northern Rock are moving into the non-conforming market, and non-conforming lenders have started to introduce near-prime and prime products.”
MM (2) carries a feature article by Ian McKenna on consolidation culture in the technology market for life and pensions business. McKenna says: “Many people in the industry, me included, have long believed that such consolidation was necessary in order that those organisations delivering technology to intermediaries and advisers could achieve economies of scale.”
One of the most important benefits should be tighter integration between the capture of ‘know your client’ data in the factfind and the re-use of this data.
McKenna concludes his article by saying: “It does not take a rocket scientist to work out that at some stage in the game, consolidation players in the life and pensions market need to hook up with those in the mortgage market.”
Publications mentioned
Financial Adviser FA 14 Dec
Money Marketing MM(1) 14 Dec
Mortgage Introducer MI 16 Dec
Money Marketing MM(2) 21 Dec
