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Lenders may struggle to update IT systems in time for FSA regulation

  • 29/07/2002
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Software company Marlborough Stirling believes lenders are in danger of leaving IT system updates d...

Software company Marlborough Stirling believes lenders are in danger of leaving IT system updates demanded by regulation too late.

According to lenders’ opinions canvassed at a recent Marlborough Stirling seminar, approximately 85% of lenders expect mortgage regulation to increase their cost base.

However, most think they can combat this with end-to-end electronic transactions, re-engineering business processes and outsourcing. Half see regulation as the biggest challenge over the next five years.

Steve Morris, head of mortgage & lending solutions at Marlborough Stirling, said: ‘Clearly IT has a key role to play if lenders want to continue to operate both profitably and favourably beyond 2004. But mortgage regulation has already been postponed once, so lenders will need to act fast, and in many cases work together, if they are to adopt new ways of doing business before 2004.’

But Allen Bruce, marketing manager at UCB Homeloans, thinks it is better to adopt a ‘wait and see’ approach.

He said: ‘We monitor what is going on and try to gear up for what might be required. But if the Financial Services Authority comes out with a radical reform that requires a complete rewrite of our systems, then they would have to give plenty of notice for introduction, anything less radical ‘ an extension of the Mortgage Code for example ‘ and most lenders would be relatively compliant already.’

He added: ‘The main objective is to have resources available to implement any changes. Once we know what they will be, a lot of time and money could be wasted by making assumptions of what they will come up with.’

The conclusion of those at the seminar was customer service could be improved through the use of web-based systems, enabling communication and administration across the entire mortgage supply chain.

The majority of lenders canvassed felt regulation would reassure customers, but not improve customer service.

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