It’s not often I listen to the Queen’s speech or indeed take heed of politicians, but this week has seen some interesting news on estate agents and the impact of Europe on the UK mortgage adviser.
Writing in the impressively re-branded MI, Grant Bather highlights proposed legislation for improved arrangements for consumer advocacy and the regulation of estate agents. With complaints rising by 9 per cent according to the voluntary estate agents’ Ombudsman, and over half of all complaints being made against firms who don’t subscribe to the scheme, it’s clear this is long overdue.
Ian Giles, in MSL, highlights the impact of regulation on the broker and the upcoming introduction of Home Information Packs creating an unfair market. With a significant proportion of the distribution power sitting with estate agents, it’s only fair they work to the same standards as mortgage advisers have to.
The role of Europe
Two years on from ‘Mortgage Day’ and with the Financial Services Authority (FSA) moving away from its rulebook to focus more on ‘Treating Customers Fairly’ and six customer outcomes, it’s clear that the impact of Europe is playing a role in their new guidelines.
As reported in FA, the European Parliament was due to vote this week on an EU committee’s proposal calling for the ability to transfer loans across borders with standardised packages of European mortgages for trading on capital markets. With this directive on the horizon, it won’t be long before our advisers in the UK will need to assess the competitiveness of euro mortgages or those deals based on European rates rather than Bank Base Rate (BBR) or LIBOR. John Purvis MEP is calling for brokers to learn other countries’ systems – let’s hope the FSA succeeds in its bid for more data on costs and benefits before harmonisation goes ahead.
Rob Griffiths, writing in MS, continues the regulatory theme highlighting the FSA consultation paper, especially the proposal to remove the Training & Competence requirements for Markets in Financial Instruments Directive (MiFID) firms to pass exams within specified time limits and the associated record-keeping guidance. He says an adviser could be supervised for the duration of their careers, and never be qualified – not placing the industry in the best light.
The rate rise
An interesting statistic from the FSA in stage one of its regulation effectiveness review, reported in MM, is that consumers are shopping around for mortgages. Robin Gordon-Walker, spokesperson for the FSA, reported 77 per cent of consumers were getting information from more than one firm before making a decision – a positive result of regulation.
The BBR rise is still receiving high exposure across the trade press, but it’s good to see economists changing their predictions of an early BBR rise. Quoting Andrew Gall of the Building Societies Association, MS comments that rate changes in the next two months are unlikely, dependent on wage increases in the New Year. It’s also good to see petrol prices on their way down, as well as the Bank predicting inflation falling in the first half of 2007 after the recent fall in oil prices. With most lenders having already passed on the rise (MI), it seems the change in BBR has already been factored in to new products.
Making headlines
Any rate increase combined with a major brand changing its lending criteria is guaranteed to create news. It’s interesting how a number of stories can hit the press at once to create the wrong headlines, such as ‘Mortgage meltdown’ (Sunday Mirror).
Paul Beadle investigates how initiatives to meet changing consumer demands can create the wrong impression. Irresponsible seems to be a word that is repeated again and again, with reference to a debate between Ray Boulger of John Charcol and Simon Read of Victoria. Boulger highlights the increases in house prices creating the need for lenders to review their criteria, while Read identified the ease of which unsecured borrowing can be obtained as the problem. At least in the mortgage market we have regulation in place to go some way to helping the customer find the most suitable product.
David French, in MI, highlights that this is not a new issue, but moves by Abbey and HBOS add a new dimension. Price will become less of a deciding factor as lenders look to criteria to differentiate their offerings.
Finally, Peter Chadborn writing in FA warns that higher lending multiples may be opening doors for first-time buyers, but protection must follow suit. In MS, Bright Grey stated only 23 per cent of home owners had mortgage protection and over three times more had contents cover. It’s clear, when it comes to a customer’s priorities, protection is not being given the attention it deserves.
