News Review: Packaging


FSA should turn its face to the future by


Ian Balfour, CEO, Solent Mortgage Services


the very public naming and shaming of lenders by the Financial Services authority for past misdemeanours three years after the event is as interesting for the total lack of irony in the announcement as for the timing. But before anyone gets


the impression this is just another “bash the regulator” piece, i think all parties in the mortgage market should shoulder some of the responsibility for the expansion of the sub-prime bubble and its subsequent fallout.


Without going over old ground yet again, all the elements of the perfect storm came together in the wrong place at the wrong time. a booming property market, vast amounts of money looking for a good return, lenders needing to fill quotas at the expense of quality and customers too keen to be homeowners or take some of the profit from their property to fund a lifestyle not within their means were all contributors. confidence and capital


markets closing created a spiral of decline. mortgage assets did not become toxic overnight as will be proven over time, but politicians and the media had the sound bite they wanted.


Regulation overload breeds ambulance chasers


I was delighted to see the news that the Association of Mortgage Intermediaries now represents 90% of mortgage intermediaries and bearing in mind the decimation of numbers from around 30,000 to 10,000 it is good that the survivors recognise the value they get from their trade body. There is no doubt in my mind that apart


from the need to circle the wagons in the face of the effects of the recession and regulatory pressures, a lot of the support is due to the robust stance that AMI has taken on potential regulatory changes since the change of leadership. Particularly as it now seems that AMI director, Robert Sinclair, has been given real licence to go into bat on behalf of an intermediary market that I think had been feeling abandoned. I don’t think there is any genuine intermediary who does not believe that a robust regulatory framework works in everyone’s favour in the long run.


But it is time to stop looking backwards. if it is important for justice to be done, i question whether the attendant publicity attached to the current name and shame exercise serves any constructive purpose. the FSa might think


that by going public their action shows decisiveness and strength. But all it really demonstrates is how easy it is to be wise after the event. Yes, it is important that


we learn lessons from the past and i don’t think many would argue that mistakes were not made at all levels. However, here we are over three years from the start of the meltdown and we are still looking over our shoulders. it’s time to clear the decks


The main difficulty is the fact that regulation seems to have developed a momentum of its own and there has hardly been a moment in the past five years when there has not been yet another consultation paper. We are all suffering from regulatory overload and its consequences. I was forcibly reminded of one of those consequences by the rise of yet another breed of ambulance chaser claims company looking to make a profit out of the past. This area of expertise is uncovering and getting “compensayshun” for those who were mis-sold mortgages. The targets are not limited to brokers but include packagers and lenders.


This latest shoddy exercise is aimed principally at the greedy and gullible in much the same way as there was a fashion for using regression therapy to remember abuse in order to fuel compensation claims. As that therapy has been largely


discredited it is hoped that this latest tawdry little money-maker will also be kicked into the long grass where it belongs.


and move on. no one comes out of this blameless and that includes the regulator. i believe the vast majority working in our industry care enormously for it and its customers, so the future is bright.


MORE THAN JUST A STICKER At the risk of boring the pants off you gentle reader, I want to return to the topic of the value of packagers or product and service distributors depending on your point of view. Although an important part of what we can offer the moniker “packager” hardly does justice to the activity that those businesses are now involved in. The key word is distribution and we inheritors of the packaging mantle believe that we have a major role to play now - and in the future as the industry picks up - to act as a distribution hub for lenders. It can be argued that the mortgage clubs do the same job and leave the intermediary free to deal directly with the lender. While the best mortgage clubs are a great helpmate to brokers, distributors provide a much more hands-on level of assistance to help brokers with placement. We could be more directly compared with the mortgage desks which offered that as part and parcel of the life assurance company scene of the 80s. As we know from the feedback we have received, finding the right deal is not just a question of picking a product because it fits the criteria on the website.


mortgage introducer APRIL 2011 21


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