Mortgage Market Review consultation paper


e the distribution landscape changing? month: How do you see the distribution landscape changing?


Mortgage distribution has always been an ever-changing beast. It starts with a provider using a few, carefully chosen distributors who in turn provide “quality” customers at decent margins and evolves from there. Slowly but surely the number of distributors increase, margins become squeezed as competition increases and quality becomes slightly less important. Eventually volume replaces quality as the most important aspect which gives a disproportionate amount of power to the distributor rather than the provider and all hell breaks loose. The number of distributors increases beyond control until the inevitable tipping point causes a sudden, dramatic re-boot. Cue product providers looking for a few, carefully chosen distributors. It was ever thus, and so it will be again. Whilst this process is almost cyclical, what does change as


technology and the industry evolves is the type of distributor. We are now not just looking simply at branches and brokers, we have master-brokers, (a much better phrase than packagers), online, supermarkets and probably others we have not even contemplated yet. So what of the immediate future? Well, there will be a whole


generation of people who may never see the inside of a bank, as anyone who has seen a two year old handle a mouse will understand. Branch networks can only ever handle a certain amount and any uplift will have to come from the tried and trusted independent broker. The main changes for brokers will undoubtedly be the


continued strength and safety of becoming an AR rather than facing the increasing regulatory pressures and costs alone. There will still be a place for medium to large brokers to move to a DA basis when they get to a certain size and require a little more freedom, but these will be few and far between for the foreseeable future.Supermarkets and other direct institutions will become a force to be reckoned with, but as the public become more and more savvy, so the demand for quality advice will continue to increase. I am convinced that in essence the future of the


Andrew Montlake, director Coreco, (AR Mortgage Advice Bureau)


independent broker, and I stress the word independent, looks rosy, different but rosy.


sense. Do you want to be a part of the next Bigger Issue? Email nia@thepublishinggroup.co.uk MoRtgAge iNtRoduceR SEPTEMBER 2010 17


Regulation seems plagued by an appetite for reacting to history and an unabashed inability to foresee future strife. This point was rammed home to me when I read the MMR and also when I attended an MMR meeting at Canary Wharf. I was dismayed at what appeared to be a disturbing lack of joined- up thinking and understanding as well as an equally strong enthusiasm for process and box-ticking.


Sensible lending is about balancing risk and each lender will


hold differing ideas as to what this means. The MMR seeks to install parameters based on hindsight as much as common sense.


As with much of the FSA output the ultimate aims seem laudable and to industry outsiders may appear sensible and balanced but, as always, it is the unintended consequences that grate. Let’s look at the good bits. Individual registration is eminently sensible and one can only ask why this wasn’t implemented from the outset. Now that’s out of the way we can focus on the downside which is considerable. The removal of self- certification and fast-tracking is a knee-jerk reaction to the securitisation fiasco. The problem was not born of lending practice but of selling securitised loan packages to institutions that were foolish enough to mis-value and buy debt deeming it capital secure and a guaranteed income generator. Sensible lending means evaluating risk and all industry


professionals will recognise that there are instances where proof of income may be secondary to other factors. The unintended outcome is that millions of borrowers will be unable to move or remortgage which will have a depressing effect on prices and volume. The reduction to adviser numbers and cross-selling ambitions also means that advisers are no longer the automatic port of call for would be borrowers. Advisers must deal with the fallout and explain to consumers that they can no longer borrow without income proof, that they cannot


Alan Lakey, partner, Highclere Financial Services


even downsize because in


tandem with the lending changes we have been dragged through a recession.


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