As the industry logic goes, lenders will be unprepared when April 2014 arrives and consequently will have to rely much more on non-branch intermediaries.
But RBS is currently recruiting more than 60 mortgage brokers, a move which suggests one of the UK’s largest lenders also sees an opportunity. So will brokers face more branch-based competition on advice post-MMR?
For this week’s Marketwatch, our commentators are:
Institute of Financial Services chief executive Anne Kiem, who says demand for CeMAP qualifications is surging across all parts of the industry
Mortgage Advice Bureau chief executive Peter Brodnicki, who warns lenders will find branch-based mortgage advisers a costly resource
Birchfield Recruitment owner David Somerville, who reports lenders are busily recruiting telephone-based mortgage advisers
Anne Kiem, chief executive, Institute of Financial Services
It’s fair to say that ever since its launch, registration levels for the Institute’s Certificate in Mortgage Advice & Practice (CeMAP) have served as a pretty accurate barometer for the health of the mortgage market. So it’s good news for the sector that in the last six to twelve months we have seen a significant increase in the number of students on the programme.
This is influenced in part of course by the introduction of the MMR, resulting in many large lenders needing to get substantial numbers of additional employees appropriately qualified.
However, when we look at the profile of our CeMAP students it’s interesting to note that the growth in registrations is coming from right across the sector.
Increased competition in the future is therefore almost certain – if for no other reason than there will be more qualified advisers in the market. Whether the MMR itself will have an impact on competition is less clear however as it does not fundamentally alter either the structure of the market or that important distinction between restricted and whole-of-market advice.
What will be really interesting to see is whether the changes brought about by the MMR will have a genuine impact on the consumer. Only time will tell.
Peter Brodnicki, chief executive, Mortgage Advice Bureau
The competition with branched-based advice has always existed and using an independent broker will remain a compelling proposition as it always has been. There will be far more cost involved for lenders to provide this advice in an MMR world and some will definitely struggle to make that cost-effective for their businesses.
Already we are seeing high basic salary offers being made by lenders to attract brokers into branch-based advice. But for top advisers, the earnings potential will not be sufficient and the culture will be very different. Lenders will continue to attract advisers in the short-term, but the broker firms with strong lead sources and propositions are best placed to retain their advisers because of a far more compelling proposition overall.
Branched-based advisers in an MMR world will prove a very costly resource if not fully utilised, and so I have no doubt more effort will be made by lenders to drive more leads through the branches. This is nothing that we haven’t seen before and won’t see again, and we have dealt with it every time and will continue to do so.
David Somerville, owner, Birchfield Recruitment
In terms of lender activity, I am dealing with two very large companies at present that seem to have the same thoughts on the way forward post-MMR. Both are actively seeking to appoint CeMAP qualified telephone-based mortgage advisers. One is also taking part-qualified staff. The other is busily recruiting non-qualified people with sales experience in the hope that they can get them through CeMAP and running by the end of the first quarter next year.
I have seen little evidence in the expansion of face-to-face sales from these (or any) institutions I deal with. I know many are putting their non-advice telephone sales staff through CeMAP as well.
In terms of the rationale, each company will have its own reasons. But the obvious points after cost are that compliance is a lot easier to monitor and control centrally through the phone (calls can be recorded) and the ease of delivering training.
It strikes me that this low-cost option is the preferred route of acquisition for the big guys. They hope that headline rates will attract customers to call them rather than having to go out and hunt for the business. It remains to be seen if this headlong rush will result in a better service for the customer.