In one fell swoop the fact that a lender, which had up until this point been so steadfast in its direct-only strategy, should now open itself to intermediated business tells you everything you need to know about both the regulatory pressures on lenders and the impact those new rules have had on the mortgage marketplace as a whole. There were many who predicted the intermediary sector would be the big winner from MMR and, up until this point, they have been proved to be correct.
The positive news for intermediaries keeps on coming. It’s not just the fact consumers are much more open to independent mortgage advice now but it also comes in the next raft of regulation that drops into the Rulebook in March 2016. The European Mortgage Credit Directive (MCD) is unlikely to stop the trend towards greater lender engagement with intermediaries because it brings with it further responsibilities, which means greater resources and costs for lenders in order to comply.
At the recent Financial Services Expo, David Geale of the FCA outlined the anticipated changes that the MCD will bring and explicitly highlighted a number that lenders will need to introduce. Whereas the focus with MMR was on ensuring in-house staff had the necessary training and qualifications to comply with those rules, it would seem that with MCD lenders are going to have to consider the roles of, amongst others, their product designers and underwriters. Are their training and qualifications fit for purpose in a post-MCD world? Plus we will have lenders needing to ensure they comply with the partial regulation of buy-to-let, not forgetting those who offer second-charge products.
Essentially, there is no let-up for lenders – particularly those with branch advisers selling direct to the consumer – and one suspects this will continue to mean greater cost and resources will need to be spent in order to maintain compliance. A number of lenders simply decided not to sell direct because of the MMR and I wonder if, in the future, more will be looking at pulling back on their activities in this area in order to concentrate on the intermediary channel.
HSBC has certainly decided that the intermediary channel is where it’s at and there is no doubt in my mind that advisers will continue to dominate in terms of market share for some time to come. All good news and a sign of the underlying strength of our marketplace and the opportunities that exist for intermediaries. This is a good time to be an adviser and those who are able to develop and expand their offerings will undoubtedly be leading the broker charge in this new mortgage world.
Bob Hunt is Chief Executive of Paradigm Mortgage Services
