at about half of our arrears rates - that’s a product the FSA wants to ban? For the market, its dynamism and the deal that the consumer probably ends up getting it’s probably bad news.
“The key rules that keep fast-track good could easily be documented by the FSA, but as yet they haven’t done that. I think the industry needs to work together to educate better about the differences between fast-track and self-cert mortgages. There is a place for fast-track in the market for customers who fit the right criteria.”
BRokeRs can make TheIR own luck The MMR also proposes to formalise the roles and responsibility of lenders and brokers in the mortgage transaction. July’s paper gave the first formal indication that affordability will be the lender’s responsibility, raising the issue of whether lenders will want to delegate this process to brokers in the future.
But Mathewson is confident within guidelines that brokers will still play an important role. “We’ve built up a pretty good proof case that the broker can do the process bits of risk management as well as any other channel,” he says. “We contractually oblige our brokers to verify income on fast-track cases and then sample that after offer. “They prove the income more than 95% of the time. That’s as good as branch sourced business. And that’s coming from 10,000 to 20,000 sources of business remote to us. But they know that if they don’t perform on the audit they’ll lose access to our fast-track process. “If they repeat offend they’ll lose the opportunity to do business with Santander. And the networks they’re part of know that this reflects poorly on them not just the broker doing that case. It creates an accountable process.” “I am responsible for proving the
affordability of every loan that comes through the door,” explains Laing. “But like a lot of things, I rely on other people for the process. But I watch them because the regulatory responsibility is on me and it’s me that goes to prison if it’s mismanaged.
“If I’m allowed to, I have no problem continuing to rely on brokers to prove income because they’ve proven to me that with the right controls, they do that.” Another imminent change to regulation is the incoming approved persons register next year. Many are of the opinion that the number of brokers will fall yet further having already dropped from roughly 33,000 to between 9,000 and 12,000. Mathewson is sanguine about the
register though. “Anything that improves the professionalism of the industry is a good thing,” he says. “I don’t think the approved persons regime will cut into the numbers of advisers too much.” AfI is 100% committed to mortgage
brokers he says. “One of things that Santander gets about the UK market is that 57% of mortgages in this country are driven through intermediaries,” explains Mathewson. “If you are the second largest player in the mortgage market and you want to grow and sustain that market share you have to be big in intermediaries.”
Laing believes that the register will
force change in the distribution market but not necessarily for the reasons that many think. “I think distribution has to
ALAN MATHEWSON, MANAGING DIRECTOR OF ABBEY FOR INTERMEDIARIES
Age: 40
Married with two children Lives: Worcester Educated: Madras College, St Andrew’s
Employment
May 2010 to present: managing director, Intermediary Distribution and Santander Private Banking UK 2007 to 2010: director, Bancassurance Division, Abbey and Alliance & Leicester 2004 – 2006: divisional director, retail distribution, Abbey 2001 – 2004: regional director, branch distribution, Abbey 1998 – 2001: regional manager, branch network, Abbey 1995 – 1998: regional training manager, Abbey
1986 – 1995: various roles TSB Bank plc mortgage introducer NOVEMBER 2010 39
Employment 2008 - present: chief credit officer, Santander UK Retail 2006 - 2008: director, Retail Credit Risk, Santander UK 2005 - 2006: head of unsecured credit and scorecard management, Santander UK 2002 - 2005: head of credit and customer management, HBoS Cards 1999 - 2002: head of risk analysis, Capital One UK
1996 - 1999: strategic management consultant, Marakon Associates
change,” he says. “The big issue is that if all the FSA rules go through ultimately the big banks will end up more profitable because of the reduced competition. “Conversely, intermediaries’ costs of compliance will go up, turnover will go down and that means proc fees go down. That can only mean that we have a smaller broker distribution and less money being made.” It’s the word on all lenders’ lips at the moment. Quality.
“What you will see is lenders getting better at distinguishing good brokers from bad brokers,” says Laing. “One of the things we’re working on is telling the difference between brokers delivering us good valuable business and a broker who attempts to deceive our systems. Will I offer better criteria to the good brokers and worse criteria to the bad brokers? Of course I will.” So it seems it’s a virtuous circle for AfI. It wants to grow, it wants to support intermediaries and in turn it says it will trust intermediaries if the FSA allows it to. But both Laing and Mathewson say that as long as that focus on risk is borne in mind, they’re open for business. n
IAIN LAING, CHIEF CREDIT OFFICER AT SANTANDER
Age: 39 Married, no kids Lives: Northampton Educated: Loughborough University - Manufacturing Engineering
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