The Bigger Issue


With the FSA planning to publish its third M


on distribution in November, how do you see Each month Mortgage Introducer takes a look at the bigger issues. This m


We’re positive about the future of intermediary lending. It clearly meets a big consumer need - especially with continued economic uncertainty and a complex range of product options to choose from. Mortgage intermediaries have also gone through huge


change with an estimated two thirds cut in numbers. Those remaining firms are the ones with high professional standards and established customer relationships. These are well placed to deliver the advice consumers need


and to raise the reputation of independent advice. The FSA’s recommendations so far appear to do little to damage that and there’s an opportunity for MMR to strengthen the sector. We expect the proposals to include a clearer definition of the


responsibilities of lenders and brokers. That would provide clarity around accountabilities and should make it easier for consumers to understand what intermediaries offer. We also believe there will be registration of individual business


writers. This should help underpin professionalism. The biggest opportunity though is for the intermediary sector to work more effectively together to positively promote itself. There is a real need for the sector to promote the value of independent advice and to build its professional reputation. The difficulty however is promoting something that is not well


defined. Brokers, distributors and lenders should develop this clear definition of the services and benefits clients get, and help them really understand the advantages. Another challenge is the impact of RDR. Intermediaries will


need to choose between focusing on mortgages and related insurance and protection products, or being an IFA or ‘restricted adviser’. The latter will require higher level qualifications and greater


regulatory overhead. That will have an enormous impact on the shape of intermediary mortgage distribution and on the services that lenders will need to provide to support different brokers. It could see more consolidation among networks to gain scale and cost efficiencies; more DAs merging or joining networks, especially those that want to operate as wealth managers.


Lee Gladwell, business


development director, Platform


Pundits predict more advisers will leave the mortgage industry over the next three years, put off in no small part by the increased burden of new regulation. But in a country where home ownership is so important and proportionally high, more stringent regulation was inevitable after the credit crunch. Not-withstanding EU plans for more responsible lending


and borrowing later this year, the MMR puts in place the right framework and incentives for the future of the market. At Tenet Group, we are already seeing the impact of the Retail


Distribution Review among our adviser base and our view of the MMR, like the recent extension of the approved persons regime, is that it is not a concern for good brokers conducting and writing good mortgage business. Let’s not forget that many of the changes we can expect are


already being managed by brokers as a result of the dysfunctional mortgage lending market. Lenders have already invested considerable time and effort bringing change to affordability, income verification, and arrears management processes in the downturn to manage their own risk exposures. But significantly we are increasingly seeing brokers advising


across the product board, broadening their share of wallet through holistic financial advice. While we have some way to go, we are seeing brokers recognise that their clients have not only a transaction value but also a lifetime value. Some day to day things will change in order to accommodate


the MMR. Servicing will take longer (some estimates suggest two to three days), and consequently tiered servicing may become a reality as lenders endeavour to reward good volume, good quality loan producers. But I believe the biggest challenge in a post MMR world


will be the battle for customer ownership. Customers need to understand and value the advice they receive and all parties need to move on from a transaction based relationship. Advice in the public’s mind cannot become the preserve of product providers. Client ownership and retention will play an increasingly important part in financial services as it will determine who has the balance of power in financial sales. Let battle commence.


Gemma Harle, managing director, TenetLime


Our experts have had their say, now it’s your turn to have yours. Visit www.mortgageintroducer.com and vote for the expert you think makes most 16 MoRtgAge iNtRoduceR SEPTEMBER 2010


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