What is your personal history in the mortgage industry?
I have 25 years’ industry experience which have been spent with Allied Dunbar and Zurich Financial Services.
From 1996 to 1998 I was mortgage market director for Allied Dunbar. In 1998 I moved across the group to Zurich IFA and set up the ZIFA mortgage network.
I joined Misys IFA Services in January to set up a new mortgage service for the four networks in the Misys IFA services group ‘ Kestrel, Countrywide, IFA Network and Financial Option. We launched Misys Mortgage Services on 1 May.
What does the new service offer that makes it stand out from other clubs?
It is provided exclusively for advisers within the Misys network. It offers Mortgage Code compliance support, and we will pay the Mortgage Code Compliance Board (MCCB) annual fees. We provide all MCCB support materials, code manuals, guidance notes and updates, checklists and provide CeMap and Mortgage Advice Qualification (MAQ) training. We are the holistic mortgage service for the Misys group. We also offer full marketing support, including free mortgage sourcing software from Mortgage Brain, mail shots and advertising.
We are trying to work with the members to help them operate in a fully compliant way and also to help them grow their business. We have a panel of 25 lenders, a range of exclusive mortgage schemes and all the added value benefits that you would normally associate with a mortgage club.
We have taken the first steps with mortgage compliance and from 2004, the main aim will be to enable the advisers to step into full Financial Services Authority (FSA) compliance in a seamless way.
Do you think clubs and networks will all have to give compliance support from 2004?
Once the FSA regulates mortgages I think there will be a massive shift in the make up of UK mortgage distribution. It seems unlikely that some of the major mortgage clubs would, at the moment, provide ongoing FSA responsibility for intermediaries.
We will probably see four or five network-type organisations taking responsibility for mortgages under the FSA, for those advisers that do not want to become authorised in their own right. The IFA networks will also need to take mortgage responsibility, in the same way they do now for investment and pension business. These major IFA networks will have a stranglehold on the UK mortgage market.
How will these organisations bear the costs of compliance?
This is one of the advantages of the IFA networks. Any adviser will either be authorised in their own right, which will have significant costs, or join a new mortgage network offering compliance ‘ also expensive ‘ or join an existing IFA network which already has significant compliance infrastructure within the business. So from a cost point of view it is likely the networks could integrate mortgage compliance far more cost effectively through economies of scale. Mortgage intermediaries are probably going to find IFA networks a far more attractive proposition, as far as compliance in the mortgage market goes, come 2004.
Will clubs and networks be fighting for a smaller pool of advisers?
I think so. Clearly there will be a drift out of the market prior to 2004. The first trigger will be at the end of this year when advisers have to be MAQ or CeMAP qualified. I don’t have a problem with this because I think we should ensure the mortgage market is as professional as we can make it, and I think professional qualifications are the first step along that track.
Come 2004 I think there will be some form of consolidation with some firms merging, and within an organisation there may only be one or two individuals responsible for mortgages, rather than all of them.
Where do you stand on the procuration fees and commission debate post 2004?
I think the mortgage market in terms of payments is likely to stay as it is now. Procuration fees are likely to remain and will continue to remain at the levels, if not higher, than they are at the moment.
Where do the responsibilities of mortgage networks and clubs end?
Historically they were set up to add value through collective buying power, using leverage to drive procuration fees higher and to offer exclusive schemes. One has to say that they have been highly successful over the last four or five years, but moving forwards, I think the requirements of a mortgage network, or club, will change significantly. I don’t believe mortgage clubs will last unless they offer some sort of mortgage support service, or take full responsibility for their members for FSA compliance. This is because brokers will want some kind of regulatory support and will look elsewhere if they are not offered it.
Paul Robertson is a staff writer