It seems our industry has to be reminded of certain basics from time to time. Things that seem perfectly obvious when you say them, but that get forgotten further down the line.
Take one of the three principles contained in the last MMR Consultation Paper, where the FSA said words to the effect that “lenders should only lend to people where there is reasonable expectation that they will get the money back”.
Pretty obvious, right? So how did some of us forget it? More pertinently, how did we let our industry get to a point where this had to be said by the regulator? Amazing, when you think about it.
The other subject featuring heavily in current industry debate is that “quality is important”. It isn’t just a volume game. Well hasn’t it always been?
But clearly, lots of people in our industry must have been missing the point, or at least, been guilty of only paying lip service.
We must now live the mantra that ‘quality matters’. In our experience, a focus on quality brings significant business benefits, keeps the regulator and the lenders happy and will undoubtedly be fundamental in sustaining a business model for the long term.
To us, the business benefits are really clear:
1. Doing a great job for the customer generates pride and avoids the embarrassment of walking away knowing that you have let them down by not doing things properly. And ideally being there for them when they next need your professional advice.
2. Customers who have received good quality advice and service come back. They tell families and friends. One good sale can lead to many.
3. Doing the job right the first time saves more time. It avoids re-work and re-submission, arguments, disputes and complaints. It also means lower overall costs for your business. Less hassle. Fewer sleepless nights.
These are three examples of the more positive side of the quality debate. The other side is the regulator’s attitude and the relationship with lender partners.
There is no doubt that a major part of the fallout from the mortgage market crash has been the regulator focusing more and more on exactly what is being sold and how, by who, and what records are kept of all of this.
Doing it right for yourself and your customer gets you most of the way to it being right for the regulator too. Simple, right? And given the regulator’s increasing pressure on lenders too, it is not surprising to see how active they are becoming in the drive for quality business.
Equally, there is a clear business benefit for lenders in encouraging good quality business submissions, and also in looking beyond that at a range of other measures, which determine the eventual profitability or risk of the business to the lender. These may be things like application to completion ratios, underwriting referral rates and eventual arrears performance of the mortgage loans.
Quality is not something you achieve, and then sit back and relax. It is part of every sale, now and in the future. It is not a destination – it is a journey. The demands of customers and lenders change and develop.
New rules and regulations have to be assimilated. So you have to focus on quality as something that will be integral and important to every piece of advice and every sale you make for the rest of your career.
