If you were to ask a financially literate member of the public to name a mortgage adviser, other than their own, it is a fair bet that the majority would say Ray Boulger.
Although these pages usually deal with chief executives and managing directors from across the mortgage industry, the one thing that links them is that they are the decision makers. They are influential people within their field and for this reason Ray Boulger is not out of place in their company. Boulger’s omni-presence in the financial pages undoubtedly makes him one of the most influential players in the industry. He has taken his position as Charcol’s senior technical manager to a point where he is now one of the first to receive a phone call from any journalist writing in the consumer mortgage field, appearing occasionally on the television and almost constantly in the national press.
Strange then to find out that he has actually been an independent financial adviser (IFA) for a relatively short time, and that he is also a chartered accountant who has spent most of his career to date in the securities markets. However in a way this has actually helped his career. Boulger says: ‘Being a chartered accountant has helped as an IFA, especially in dealing with the self-employed. I can read company books for example, and 18 years in the markets has come in handy for negotiating deals with lenders because I understand what is important for a lender in putting together a deal. My background in the stock market and accountancy has put me in a very good position to do what I do now.’
In fact what he does now involves several jobs. Apart from being first call for the press he also advises Charcol staff on product changes and best buys, and conducts lender liaisons for product exclusives. His job now falls into two parts, both complimenting each other.
‘I have to know the same things, it is just that there are two different audiences, and since Charcol was acquired by Bradford & Bingley I do the job for the whole group. I stick to mortgages, although I am an IFA and have a knowledge of the other fields I do not tend to keep up to date on individual ISAs for example,’ explains Boulger.
His third position could be said to be the various committees he sits on throughout the industry. This includes a position on the board of the Association of Mortgage Intermediaries (AMI).
He stresses that, in terms of regulation, AMI is vital to advisers as the majority of intermediaries who are small firms will not have time to read consultation papers. ‘AMI can help by giving some initial thoughts and encouraging them to put in their points to the FSA,’ says Boulger
One of the benefits of having the Association of Independent Financial Advisers (AIFA) as a parent company is that already has close contacts within the regulators which AMI can benefit from. The FSA will be more likely to talk to an industry body like AMI than a commercial one like Charcol. ‘It is no secret that the FSA talks to AIFA, and AMI is already invited to an FSA seminar at the end of this month. A good contact with the FSA in these early days is a bonus AMI can offer intermediaries,’ says Boulger.
Now Boulger has reached a position where he is widely recognised as one of the faces of the mortgage advice industry, does he still feel as passionate about the industry?
He says: ‘One of the things you need when talking to the press is the confidence to put over your point of view and to recognise that on some occasions the journalist may not be interested in taking the same line. However sometimes you can actually influence the story and that is when you get a lot of satisfaction; talking to a journalist and changing their perception can also change the perceptions of the people who read what they write.’
He points to lifetime mortgages as an example of why he through Charcol has made a difference. ‘We believe, along with many other industry commentators and providers, that it is ridiculous not to regulate home revision plans because they can be viewed as higher risk than lifetime mortgages, where you at least have the chance of paying the loan off. By focusing on those Government failures we have been able to generate publicity, which I think has been instrumental in getting the Government to recognise that it needs to regulate these plans, as mentioned in the pensions green paper last December, ‘ says Boulger.
However, he worries there will be a time lag from when the FSA starts regulating mortgages to the regulation of reversion plans. He says: ‘Obviously there will be advisers who are unregulated by the FSA. These people will look for something else to sell and second charge loans and reversion plans will still be available. Someone who is not regulated should not sell these products. There is a huge danger of storing up trouble for the future, the message I am putting in the press is that it is even more important to seek independent advice on equity release than other products, a tied agent will not even be able to talk about the lifetime mortgages side of the market.
He is particularly annoyed with the Treasury’s understanding of the market, citing its reason on not regulating second charge mortgages ‘ ‘your home is not normally at risk with a second charge mortgage.’ He said: ‘I think it is worrying that the Treasury clearly does not understand mortgages and has not been bothered to do its homework before issuing a consultation document. The OFT has announced a review of consolidation loans, 60% of which are second charge. So hopefully that will convince the Treasury.’
He is also less than convinced with the Treasury’s plans to encourage long term fixed rate mortgages for the UK market, deeming success unlikely unless the yield curve changes. He says: ‘At the moment short term rates are lower than long term and the public will not be prepared to pay a premium for a long term fixed rate, unless they are worried that rates will shoot up. With the Bank of England in charge the public have more faith that rates will at worst rise a bit and do not see the need to protect long term. It is very hard to see long term fixed rates taking off in this country, unless we get an economic situation where interest rates are lower at the long end of the market than in the short term, which has happened before but needs a very different economic situation to the present.’
This would involve a short term base rate rise to control an economic problem, which the City thought that would work, thus not affecting longer term rates. Boulger has a different proposition: ‘What we should do is convince the Eurozone to adopt our system which is by far away more sophisticated, and offers more choice. Gordon Brown does seem to be backing away a bit about us going down the continental route and is now talking more about American mortgages.’
On the principle that no conversation with Boulger would be complete without touching on regulation, he is asked if there was anything left of interest in the subject that has not been covered already.
Naturally he obliges: ‘One key question is the definition of independence. What the FSA said in CP186 is that if you want to be an independent mortgage adviser you will either recommend from the whole market or from a representative sample. The question is how to define representative; the FSA will probably not give a definitive answer. It is interesting that some clubs and networks have been expanding their mortgage panels recently; I suspect it is partly to ensure that they have enough to be considered representative of the market. Some are trying to keep to small panels, it will be interesting to see how the FSA monitor this.’
Not all expanded panels may be valid. ‘Some panels are constructed on the basis of only lenders that pay a procuration above a certain limit will be considered. There are also organisations demanding that lenders pay an up front fee of tens of thousands of pounds to be on their panel. I think the FSA is going to take a pretty dim view of companies that construct panels on this basis,’ says Boulger
He adds: ‘I wonder if the FSA is aware that it is going on.’ If anyone at the FSA reads the papers and as long as Boulger keeps his voice, it is highly unlikely that it would remain in ignorance for long.