If there is one thing every mortgage adviser across the UK should do, it is read and, if necessary, respond to the Treasury’s latest consultation on the regulation of mortgages and mortgage advice.
While trawling through pages of Government documentation may not be your top priority, its contents stand to change the way you do business for good.
In it the Government outlines what it believes to be the best way forward for regulation and invites any interested parties ‘ including brokers ‘ to respond.
Tied agents will be particularly interested in one of the proposals. In the consultation paper the Treasury appears to suggest that tied agents will not be able to claim to offer fully independent mortgage advice if they are tied on the life side.
Another area of interest for all brokers is the £5 fee brokers can charge when a mortgage falls through and the Treasury has explicitly highlighted the fact that it wants broker views on this area.
But perhaps the most important factor for brokers to consider is the cost of regulation. Mortgage regulation is expected to cost £68m in the first year and £32m a year from then on. Just to put that into perspective the MCCB operates on around £4m a year.
So where will this money come from? Of course the borrower will end up paying a large chunk, but what about brokers? If the fees paid by sole trader IFAs are anything to go by, brokers can expect to see fees rise tenfold to between £1,000 and £1,500 a year in 2004.
With many mortgage brokers operating on much smaller margins than IFAs in the investment markets, such a high fee could make many advisers reconsider whether it is worth remaining in mortgages.
It is a well-known fact that very few brokers responded to CP98. Estimates suggest less than 1% of firms made their views known to the Government.
If brokers fail to tell the Treasury what they think, it would be fair and reasonable for them to assume the broking community is happy with the proposals.
So the ball is now in your court. If mortgages are your bread and butter business, read the document and if you disagree with any of its contents let the Treasury know.
Brokers are being given the opportunity to shape the future of regulation. Speak now or forever hold your peace.
l The document can be viewed at www.hm-treasury.gov.uk and downloaded. Brokers have until 30 April to respond.