The third millennium is turning out to be a watershed for many in the mortgage broking business. Over the last few years, the profession has experienced a major shake up in the form of compulsory registration with the Mortgage Code Compliance Board (MCCB). A sizeable proportion of mortgage advisers has dropped out of the market rather than registering. Now we can assume that whoever remains active in the mortgage intermediary sector is committed to making a success of it, but they still have some major hurdles to clear, not least of which are compulsory qualifications.
Whatever comes of statutory mortgage regulation by the FSA in the long term ‘ and it looks likely that mortgage lenders will be policing the activity of their own introducer base ‘ the most urgent item on the short-to-medium term agenda is passing the compulsory mortgage exams by the December 2002 deadline.
This deadline may seem a long way off, but ignore it at your peril as no extensions will be given by the MCCB and those without qualifications will no longer be able to give advice to clients after this date. So for those who are serious about staying in the mortgage business, the time has come for some urgent action.
The latest figures from the MCCB look promising with only 10,000 advisers still to register with one of the official examination bodies, out of a field of nearly 60,000. However, registration is one thing ‘ sitting and passing the exams is another. So far, only one-third (20,300) has passed the qualifications, so it remains to be seen just how large the field of qualified advisers will be on 1 January 2003. It could be argued that the market is ripe for further culling ‘ after all, at 60,000, there is one mortgage adviser for every 1,000 people in the UK.
If the compulsory exams result in removing some operators who are not committed to the market, we should not see much loss. Weeding out advisers who are either not capable of learning the syllabus, or not serious enough to attempt professional exams in the first place, is potentially excellent news for those who choose to remain in the market. After December 2002, a leaner body of fully qualified mortgage intermediaries will emerge which can start to shake off the old, tarnished image of the mortgage ‘salesman’ ‘ perceived by many to recommend any deal that pays the highest procuration fee. This new body of qualified advisers can then start to reconstruct a truly professional image for the sector. Being qualified will demonstrate loud and clear the adviser’s commitment to professional standards and consumer care.
The first step in this process is to stop regarding the mandatory exams as restrictive regulation which has been arbitrarily imposed by the MCCB, and start to embrace the qualification as a way of adding value to our everyday practice.
As mortgage advisers, our principle product is our knowledge and expertise, so we must demonstrate this to the public ‘ this should not be about what ‘compliance’ might require of us, but about giving our clients peace of mind. More than just a piece of paper, it shows the client you have studied and qualified to take the most comprehensive view of their needs. After all, exams or not, every mortgage adviser is subject to the terms of the Mortgage Code.
The MCCB makes compliance visits to between 25%-35% of intermediary advisers each year and, in its own words, ‘has the power to warn, reprimand, direct future conduct, fine, suspend or de-register a registered firm’. Bearing this ongoing scrutiny in mind, it is surely the content of the exams and not the ‘pass’ certificate which will enable mortgage advisers to remain compliant with the Code. In other words, tackling the job of obtaining the qualifications will become easier if they are viewed as a helpful professional tool, rather than a threatening barrier.
Two examining bodies are currently accredited by MCCB, both of which have equal standing. The major player is the Institute of Financial Services (IFS) which has 37,000 candidates registered for its Certificate in Mortgage Advice and Practice (CeMAP), with 15,700 of those already qualified. For mortgage advisers that do not already have a relevant qualification, all three CeMAP papers must be passed. For those with either the Chartered Insurance Institute’s Financial Planning Certificate (FPC), or the Institute of Financial Services’ Certificate in Financial Advice (CeFA), only the CeMAP ‘bridge’ paper needs to be passed.
The second accredited examining body is the Chartered Insurance Institute, which administers the Mortgage Advice Qualification (MAQ). This is only open as a ‘top-up’ to those already holding FPC or CeFA qualifications. So far, of the total of qualified mortgage advisers, those who are topping up FPC or CeFA qualifications predominate, consisting of all of the MAQ graduates (2,900 so far) and half of the CeMAP graduates who have taken the bridge paper.
The IFS has made great strides in extending the availability of examinations and currently CeMAP papers one and two can be taken at around 150 DVLA centres across the UK. The multiple choice questions are answered by candidates using touch-screen technology and the papers are electronically marked with the results available immediately. Currently, paper three and the bridge paper ‘ both of which contain written answers to case study-based questions ‘ can only be taken at the quarterly examination sessions in March, June, September and December ‘ with an extra session scheduled for October 2001. However, the IFS is working on electronic availability for these exams and will streamline this as soon as it can. MAQ can be taken at quarterly sessions (on a January, April, July, October cycle) at centres throughout the UK, and the MAQ qualification also contains a written element in addition to multiple choice questions.
In the general arena of professional qualifications, the costs of study materials and examination entry are reasonable and should be viewed by mortgage advisers as a prudent investment, which not only will enable them to continue to earn a living, but also give them professional standing. The CeMAP papers one, two and three cost £70 each, which includes both a workbook and the examination entry fee. The bridge paper costs £95 on the same basis. The MAQ qualification costs £59 for the examination entry fee and £25 for the basic coursebook (£30 for non-CII members). There is a range of enhanced tuition options from both institutes, including computer-based exercises on CD-ROM.
A wide syllabus
The range of knowledge required under the qualifications is impressive, with the CeMAP papers one to three covering a wide scope ranging across the financial services environment; the legalities and practice of mortgage lending; product features; post-completion matters; and the principles of advising mortgage clients. The CeMAP bridge paper and the MAQ syllabus both assume prior knowledge of background financial services issues, but are equally thorough in covering the whole gamut of mortgage-related topics from regulation through to property, lenders, products, fees and repayment methods.
Each institute’s website contains details of its own syllabus and anyone who has not yet started down the examination path should have a good look at the course content. At first glance, the requirements may seem overwhelming, but there is no need to worry. Questions are not on ‘blue skies’ topics and most syllabus areas reflect the actual business of giving good advice and arranging mortgages in a responsible way to the benefit of clients ‘ which is what the majority of mortgage advisers do every day. Neither are the questions designed to ‘trick’ candidates into making the wrong choice ‘ the examining bodies want people to pass, not fail. If you find the whole subject of exams gives you a sinking feeling in the pit of your stomach there are many strategies to follow which can break down this fear and start to make the whole task look achievable.
Starting to study
A good start would be to mark all the topics where you feel you already have a good basis of knowledge, and this will give you a guide to where you need to direct the most study effort. Next, break the task up into manageable chunks and timetable these over the period until your chosen exam date. It is a good idea to set aside a regular time each week to study ‘ perhaps a night when your partner goes out and you can concentrate on the workbooks. Above all, testing yourself as you go along and consolidating the knowledge gained is essential for success because staying up cramming all night before the exams will minimise the chance of passing the paper. Some specialist organisations (such as PFA Training, Eclipse Training and mortgageforce) offer professional training courses and guidance to assist in learning the syllabus, and even to give tips on exam techniques.
There have been no barriers to entry in the mortgage market prior to the evolution of the Mortgage Code and three years ago no mortgage-specific exams existed. The fact that virtually anyone could set up as a mortgage ‘adviser’, irrespective of knowledge or experience has not done the industry any favours. The hitherto non-professional status of mortgage intermediaries has allowed the industry image to degenerate ‘ and in a media climate all too ready to blow the whistle on financial ‘scandals’, we need to redress this balance and recreate the trust factor for clients. What better way to achieve this than to build a profession of fully qualified practitioners? Intermediaries must now seize this perfect opportunity to evidence their commitment to professionalism in the mortgage arena ‘ by getting ‘qualified’ now.
Institute of Financial Services
Telephone: 020 7447 111
Chartered Insurance Institute
Telephone : 020 8989 8464