Q. What issues has IMLA been involved with recently?
Our presence has proved important when sitting around the Council of Mortgage Lenders’ (CML) table ‘ ensuring proper attention is paid to intermediary trade issues. Other people at the CML, no matter how senior, are unlikely to have that day-to-day understanding of the intermediary market.
Recently the main issues we have been trying to give an intermediary view of are related to regulation. With all the regulation changes that have been happening over the last 18 months, we have had to be extremely active in discussions.
Q.What is IMLA’s stance on the Treasury’s proposed regulatory regime?
We believe it will bring significant changes for the industry as a whole. We are concerned that intermediaries fully understand how they will be affected and get their consultation responses back to the Financial Services Authority in time. We hadn’t finished the consultation on CP98 and there were some issues in that paper we were concerned about. It is our view that items such as pre-application illustrations should still be included in the new regime. So there are a number of key issues that are to be addressed.
There also needs to be more clarity in the wording of the proposals ‘ there is confusion about what the term ‘advisers arranging on mortgages’ means. This needs to be defined as some people are concerned this term will also include the packaging process. We need more clarity from the Treasury before we can progress.
Q. What do you think are the other main issues currently facing intermediaries?
Apart from issues relating to regulation, what is central to intermediaries is the need to get qualified by the end of the year in order to continue to give advice under the Mortgage Code. Many advisers may prefer to be getting on with business rather than studying for exams, but there is no choice about it.
Other than that, the main issues facing advisers lie with what is happening commercially. There are still too many lenders and competitive pressure is huge. Remortgaging activity is still unbelievably high, meaning mortgage margins are closing in all the time. With the added burden of regulation, pressures on profitability for lenders are getting more extreme. This will ultimately impact on intermediaries. Advisers therefore need to look to the future. There is pressure on advisers to get their business strategy right now, or they will not have a business in three or four years. I am not sure that intermediaries are as focused as they need to be about the future.
Q. Do you think there is need for a fresh trade body to be launched for mortgage intermediaries?
In light of forthcoming regulation, large, sophisticated intermediaries may not need a trade body, as they have the resources to get compliance systems in place. But for smaller intermediaries, there has never been a bigger need for support.
Knowing what is going on and having a voice during the consultation period is crucial. A trade body is needed to get advisers up to speed with current issues. One of the reasons we need a trade body is because the market is so fragmented, and at the same time this is the reason why it is proving difficult to set one up.
There has been a lot of talk about it for over a year, yet no one has hoisted that flag up yet. It will happen ‘ I am very confident it will. It is a question of getting support from other key parts of industry and being very clear about what that trade body will do from the outset.
Q.Has IMLA discussed the possibility of setting up a new trade body?
We want it to happen and we want to help it happen. Whether that means we do it or help someone else to do it does not matter.
What we need to make sure of is that if a new body is set up, it is the only trade body ‘ not one of many. IMLA members access most of their business from the intermediary market, so it is totally in our interest there is a body to help intermediaries deal with changes as they happen ‘ intermediaries’ problems soon become our problems. We do not have a definite answer on what our involvement may be on setting up a trade body. We are talking to a number of people either to get them to help us or to get us to help them. We are reasonably well advanced with discussions, but there is no conclusion as yet ‘ just a number of possible options. In the absence of a trade body, IMLA will be taking on intermediaries’ issues to form a response to the Treasury’s draft consultation paper. We are happy to bridge the gap in the meantime.
Kirstie Redford is deputy editor