Some lenders are still to announce whether they will be adopting the European Standardised Information Sheet (ESIS) or the enhanced Key Facts Illustration (KFI+). Steve Walker, managing director of second charge master broker Promise, said these delays may result in the removal of some lenders from panels until they are ready to comply with the MCD’s rules and requirements.
Promise Solutions, which deals mostly with secured loan referrals, plans to adopt a new process for the MCD from 15 February, meaning any lenders it deals with will need to be compliant.
“A lot of lenders are still not yet on board with the new documentation and we can’t really move until all lenders have decided their stance,” Walker said.
“Where the problem will arise is if lenders aren’t ready for 15 February. At that point brokers will have to decide whether they have enough lenders on board to make a move and those that aren’t ready will have to come off panel until they are ready,” he added.
Over a third of respondents to a recent Mortgage Solutions poll said they have found the new ESIS and KFI+ documents ‘confusing’. A further 18% said the MCD documentation was ‘easy’, while 45% found it to be similar to the standard KFI.
Walker said that while the changes were causing pressures on IT and new advice processes, it was something the industry would be forced to work with.
He added: “Perhaps the bigger challenge is that when the ESIS comes out we then have to develop technology which talks to the lender’s system. You’re looking at a minimum of two weeks to build tech which will do that, so if half a dozen lenders all launch their ESIS a week before we go live – which let’s face it is the end of next week – the technology won’t be in place to create a seamless transfer of data from our system to the lender’s system.”
Simon Gammon, managing director of Knight Frank Finance, said that while MCD rules and documentation were ‘fairly clear’, they were essentially guidelines that were being interpreted by each individual lender.
He said: “I don’t have a problem with documents but if you’re a whole of market mortgage broker, you could be dealing with over 50 lenders a year and you’ll have to learn which document every lender is doing.
“If all lenders launched their chosen document on the same day that would make things easier. But some are already doing it, others haven’t started and others haven’t even announced what they’re doing,” Gammon added.
“This is a short-term pain but it’s very real right now.”