As brokers recounted their struggles to place apparently squeaky-clean cases, the rejections without proper reasons and the cost to their clients, the FCA’s head of mortgage policy Lynda Blackwell looked visibly shocked. This was not the message the large broker firms, networks and trade bodies had given her, she said.
So why is there a gap between brokers’ experiences on the ground and the regulator’s understanding of the issues? And how can the industry act to solve it?
For this week’s Marketwatch, our commentators are:
Middleton Finance principal Daniel Bailey, who calls for more FCA roadshows on the ongoing issue of affordability checks
Pink Network head Mark Graves, who says the onus is on networks to invite trade bodies and regulators to participate in events
Association of Mortgage Intermediaries chairman Pat Bunton, who argues only a trade body can put forward a coherent and powerful message to the regulator
Daniel Bailey, principal, Middleton Finance
Affordability checks are an area which will get many a broker moaning.
It has been common practice for several years for mortgage brokers to carry out affordability checks when seeing a client. As well as the traditional outstanding debts such as credit cards, loans and car finance, brokers are expected to document monthly outgoings on utility bills, food shopping, council tax, pension contributions, insurance and more in order to assess if a client can afford the mortgage.
Most outgoings can be seen on client’s bank statements. But how much further will brokers have to go? Will we need to start collecting food receipts and utility bill payments? We already gather a fair amount of information from clients. Will this not just lead to client frustration if we are going to ask for more?
It would be ideal to see the FCA liaising with brokers on a regular basis through roadshows, or through a committee of brokers which will put our views forward. After all, we as brokers want a regulated industry where we can carry out good quality business on behalf of our clients.
If brokers’ voices can be heard we can work together to ensure our industry prospers moving forward.
Mark Graves, head of Pink Network
Based on The Mortgage Event held this week, it appears that there are inconsistencies between what the head people and the trade bodies are saying, and what the brokers on the ground really think.
To solve this, certainly from the appointed representative side, the onus is on networks to regularly invite trade bodies and the FCA to their events around the country to talk with their brokers. Those bodies also need to make the effort to appear at these meetings more frequently.
Pink holds fortnightly cluster meetings around the country backed up by quarterly regional sales meetings so we can give both FCA and AMI a forum to talk and answer questions. However, to really understand how brokers feel, these representatives need to do more than give a presentation and leave. They need to talk with the advisers on an individual basis, stay around for the break times and really listen to what the advisers are saying.
Advisers need to believe that they are being listened to and that their opinions are being heard. I represent my network but I cannot speak for all the advisers – my opinion is just that. Then, when a decision has been made, networks must ensure they communicate it up and down the line so members understand what is going on and why.
Pat Bunton, chairman, Association of Mortgage Intermediaries
It is important to remember the regulator hears a cacophony of noise. I would see the trade body as being the right way to communicate with it. If we get the right feedback from members and firms we can identify the correct issues and give them to the regulator in a joined-up way. If you have hundreds of voices you can end up with paralysis, if you are not careful.
It shouldn’t be forgotten that most networks are members of the trade body, as are most medium and large directly authorised firms. If you are a small firm, you can feed your issues back to the AMI direct, or you can tell your network, which will feed it back on your behalf. This allows AMI to pull together a consensus view for discussion with the regulator. That will be far more powerful than if the regulator hears a whole number of conflicted views.
All of the work we do as a trade body is for the benefit of our members. While those who are not members may still benefit from what we are doing, they are not contributing. This is not a great place to be in if you have a specific issue you want the trade body to take up on your behalf. We are here to represent our members – so make sure you are one and engage positively.