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The MMR is here, but at what cost? – Toni Smith

by: Toni Smith
  • 22/04/2014
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The MMR is here, but at what cost? – Toni Smith
What has been the true cost of the Mortgage Market Review? Both the time and the actual costs to everyone throughout the mortgage industry have been immense, so who will pay for this and just how will it be accounted for?

The MMR has required a vast amount of resource to be diverted for up to a year now but particularly in the last six months. Lenders have had to make a huge investment in IT in some cases, while networks have had to revisit fact finds and train every broker in their network as well as increasing the amount of communication issued often many times over.

Thinking about it across the whole life cycle of the mortgage there have been changes to IDDs, fact finds, sourcing software, training and events put on with the associated costs of hiring locations, producing manuals and validating exams, as well as the immense cost of taking both brokers and BDMs off the road and away from their clients while they have undergone training.

Many brokers have had to bring in more administration staff to deal with the increased amount of documentation required while in the case of lenders there has been the cost of retraining their entire customer facing mortgage staff – with the result at the moment that some lenders can no longer offer face-to-face mortgage advice in their branches.

I am not convinced that budgets and targets will be reduced to allow for this. Most firms across the industry still need to bring in the same amount of revenue, especially in a rising market, so where will the costs be recovered from?

Will the costs be written down in firms’ accounts as a one-off cost? Will it result in more aggressive pricing to increase lender volumes or prices going up to increase margins or will the costs be recouped by a reduction in staff numbers and lowering head count?

While the aim of the MMR is to put the borrower’s interests at the heart of lending, we cannot forget the cost of one of the biggest shake ups our industry has ever seen.

Toni Smith is sales operations director at First Complete

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