By Sean Hornsby, sales and marketing director at Mortgage 2000
Not so long ago, it was difficult to pick up a mortgage publication without it having some reference to the battle for a competitive advantage between electronic CTPs. Now the war between the platforms appears to have reduced to the occasional skirmish.
So are we any closer to a solution? The answer to both is no. The problem is mainly down to regulatory developments. A year ago, there was a hive of activity among the main players in preparation for CP98. Both Mortgage Brain (MB) and Trigold claimed they had the solution. Then CP98 was set aside and the FSA’s regulation of advice is due for 2004. So why has this made a difference?
Beating the deadline
The CTPs have around 18 months to produce a system that meets FSA requirements, if they want to allow time for it to be marketed. If we assume all the systems achieve this goal ‘ and there is no reason why this should not be the case ‘ then what will make any one system more appealing than the other?
We can safely assume various audit trails and compliance frameworks will be accommodated within each system. So, it will be those added extras that make each individual system more appealing, and electronic trading capability. However, until all the regulatory issues are resolved, we are unlikely to see the launch of a definitive system.
Meanwhile, it is a waiting game. Most advisers are likely to choose a system today based on what it can deliver now, and future decisions will be based around the system’s capability at that time. However, despite various claims about the future, those who already subscribe to a system have little reason to change. What we will see is that all the players will launch updated systems to be further developed before 2004. This is good news for advisers, as they can make an informed choice by comparing the new systems at the same time.
However, there are also likely to be other factors. It will be interesting to see to what degree lenders limit their dealings through certain platforms. Nevertheless, lenders will not refuse to deal with certain platforms ‘ it is more a case of how they do it and by when.
When you look at e-trading you have to be clear on a definition. There is a difference between submitting an application electronically, compared with full back-end system integration. This is where the issues lie. Most platforms have the technological ability to submit an application that could link up to lenders’ websites. For full integration, which enables the entire process to be carried out online, both the lender and the platform have to work together. This is where lenders can decide whom they deal with. They may elect to have full integration with a select few, while allowing the rest to submit electronically.
The same issue applies with data. Product information lies within the public domain, so any system can display it. However, lenders may choose whom they officially supply data to, leaving the rest to obtain it through whatever means they can.
Potentially, the industry could be left with a situation where individual platforms have full integration with some lenders, electronic application facility with others, data supplied direct from certain lenders and not from others. The dilemma then for the intermediary will be which platform to choose.
We will also see claims about which has the most accurate data, which has the most lenders with full electronic integration and which has the most lenders that accept online applications. Hardly satisfactory for an adviser wanting to be able to do it all with all lenders, but has to subscribe to two or three different platforms to achieve this.
But you cannot blame CTPs for this scenario. In reality, all CTPs want to deal with all lenders, but the lenders call the shots and unfortunately there appear to be ulterior motives.
First there is an MBL owned by a lender consortium, who have a vested interest in seeing MBL succeed. Then there is Trigold with the Abbey National connection. There are also independent systems like Mortgage 2000. These players will fill the top three places in the lenders ranking of CTPs, but interestingly the order of importance will vary according to the lender.
So should there be a single CTP to overcome these issues? In a perfect world there would be one independent trading platform, with data supplied by all lenders, in to which all sourcing systems would effectively plug-in to. Advisers would then see healthy competition between the systems allowing them to make an informed choice and the systems would survive based on their own abilities to deliver.
Unfortunately, this utopian vision does not exist and the war will rage on beyond 2004. It may be the case the fate of the platforms will not lie in their own hands, as the survivors, may be determined by the lenders.