News Review: MMR
MMR offers a supporting hand for intermediaries creating a level playing field
by Grenville Turner, chief executive, Countrywide
the Financial Services authority timed the release of its third mortgage market review consultation paper well and it was certainly the talk of november’s cmL conference. While there can be no
denying the impact mmr will have on the housing market and the confidence of homeowners, arguably one of the biggest positives to come from this consultation paper is that the FSa appears to have listened to the industry’s concerns… even if they haven’t fully clarified their intentions in a number of key areas.
The positives the paper contained no nasty surprises but industry ‘limbo’ continues. the industry has held its breath in anticipation of this paper and much of this ‘limbo period’ could be attributed to the FSa undertaking a true consultation. While this might be frustrating for some, i sincerely hope that the FSa uses this consultation period to listen and act fast to provide the detail which is still lacking from many proposals. if this continues for any
extended period of time it will undoubtedly harm the market and there’s a growing sense of frustration among both lenders and intermediaries that the FSa has not committed to an implementation date, instead stating that this ‘will depend on the state of the market’.
for professional standards is welcome news in my eyes and will raise professional standards in the industry. the proposed 30 month deadline for attaining qualifications should not be a major cause for concern for large intermediaries with the dedicated training teams to help fulfil this commitment. the paper does provide
some clarification as to who is responsible for which part of the affordability process and allows intermediaries to provide access to products. But it is unclear as to exactly what intermediaries will need to do to fulfil the affordability proposals. overall, most industry insiders agree that lenders should be ultimately responsible for affordability decisions but we will have to wait and see what criteria is put in place, and what level of information gathering will be delegated to intermediaries. one huge frustration i
have with all of this is the FSa’s ongoing fixation with disclosures and fees, which customers themselves rarely express concerns over. overall, we can see what
the FSa is trying to achieve and while we might not agree with the route they are trying to take with some measures, it certainly seems they have listened to a number of key concerns.
The devil is in the detail While opinion is divided as to how many of these proposals will actually materialise or make the positive impact that the FSa intends, i would urge the FSa to elaborate and
6 mortgage introducer DECEMBER 2010
provide more detail on some key areas: • consultant registration – learning from past mistakes. in principal, conducting criminal record checks seems a sensible proposal for all concerned. However, based on the lessons learned from HiPs and other government initiatives, we need reassurance that the criminal record Bureau will be equipped to cope with the volume, and i wonder how much thought has been given to the increased costs and timeframes involved in this proposal. • Spelling out the ‘approp- riateness test’. Questions still loom as to what impact this will have on intermediaries and lenders alike. From a lender perspective,
i suspect these proposals will create barriers for new lenders to enter the market at a time when the market is in short supply of competitively priced products.
Affordability it seems that the FSa has softened its original plans to ban the ‘rolling-up of fees’ into mortgage loans - i hope this move gives lenders the breathing space they require to design the types of products that the market desperately needs. However, my overriding
concern is who will pick up the price of implementing these proposals?
this
consultation paper is written with consumers in mind but the unfortunate reality is that anything which makes it more onerous for lenders to comply is likely to cost consumers in the long run. the FSa needs to use this
consultation period to find a balance and ensure that these proposals do not harm the lender/consumer dynamic and restrict the innovation that this market so desperately needs. also, if all customer-facing
sales staff, including branch based lending advisers, would now need to comply with the increased selling standards around affordability and suitability, as well as the individual registration for professional qualifications, you cannot underestimate the impact this could have on the consumers the FSa is trying to protect. i’m inclined to agree with
any proposal that promotes transparency and supports our commitment to treating customers Fairly but there’s a fine line between achieving this and causing unnecessary cost increases to the home buying process. From an intermediary
perspective, i’m pleased that the ami mmr Steering group provided a strong voice for brokers. a huge part of the intermediary sector’s anxiety with regards to these proposals stems from the mmr discussion paper, which could have potentially devalued the role of brokers. many felt the discussion paper went too far and expected the lender to take control of everything, which could have cut the role of intermediaries out of the process. now, having seen the paper,
it’s fair to say that while the role of intermediaries might change in the years to come, the value of intermediaries is not lost – this paper supports our role and that’s one thing we should not lose sight of.
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