Q. What are the winning elements for any trading platform to survive in the current competitive climate?
Compliance will be the driving force of the industry in the coming year ‘ everybody is talking about it and everybody is nervous about it. We have put in place our plans and are quietly getting on with it, although the key element has to be lender support. The rules have changed ‘ never before has the product provider been the policeman. Introducers used to be responsible for their own advice and products. Now the choice of system does not lie with the introducer, it lies with the lender. There is a view in the industry that lenders will authorise more than one delivery mechanism, but I personally cannot see an introducer having two or more platforms on the same PC. They will make a choice determined by which lenders they want to work with.
Q. If there was just one trading platform operating, how could users be ensured they would not be monopolised?
If you look at The Exchange they used to have a monopoly on quotations for life products. But in my view they charged too much, their software services were poor and they did not deliver their promises. This meant there was a rumble of discontent in the industry which has now led to a number of competitors starting up. So, if one platform becomes the dominant player and it does not deliver on its promises or charges too much, then the same thing will happen. It is the law of business, ‘ if someone screws up, someone else will appear that will provide a better service.
Q. How many lenders can advisers actively trade with via Mortgage Brain at the moment?
First, let me kill a myth. There are few lenders, less than five, doing what I would call true electronic trading. Virtually everything else is smoke and mirrors. With most systems, when you complete application forms, the lender has to re-key information.
True electronic trading is end-to-end processing, where someone submits an application and sends it directly to the lender’s back-office system without re-keying, which then processes the business electronically with no interference from human beings. How many people do that?
Virtually no lenders on any platform. The IT resources, the meetings, the project plans ‘ it costs an inordinate amount of money. So lenders have been sitting on their hands, asking, ‘what are we going to do?’
Q. Can you see the implementation date for the Financial Service Authority’s (FSA) regulations being extended?
I do not think that N3 will move, but I do think that some of the provisions for implementation will be slipped. The FSA will then turn around and say we have N4 and move some of the provisions of N3 out a few months.
Q. Do you think that larger lenders will have any weight in the decision to extend the N3 deadline?
It is probably the larger lenders that are further down the track in terms of implementing systems as they have more IT resources and so forth. Most of the larger lenders, the top 10, could hit N3 reasonably comfortably, but would be happier if there was a bit more time so they could test systems and processes. But if it is going to happen, it is going to happen.
Q. Do you think that trading platforms will realistically have compliance solutions in working order by N3?
I cannot talk for the other technology suppliers, but we are gearing up to ensure we have a fully compliant solution to deliver to our customers prior to N3.
If you look at the rules, they apply to mortgages that complete after N3, which is 1 September. Products, therefore, need to be treated in a compliant fashion before this date ‘ two months earlier. This is the date we are working to.
Q. Mortgage Brain is currently advertising for senior management. Has there been any response so far and what are your plans post-Mortgage Brain?
I am not involved in the recruitment as it is up to the consortium, but what they are doing is replacing me as I want to retire in two years.
However, I have been told that in the first two and a half weeks since the advert was placed, we have received 128 responses for the position of chief executive officer. A further 189 people have applied for the technical director position.
When my contract finishes I will be 57. I have spent the last 20 years building the business up so I think I will sit in the sun with a large gin and tonic, play some golf and go boating. If someone offered me a big enough chunk, I may be tempted to go back to the mortgage industry, but I do not think it is likely.