FR: How have changes to the industry affected the needs of intermediaries?
Just two years ago the percentage of mortgages arranged by intermediaries was less than 50%. Today, it’s around 65% and it’s widely estimated that by the end of 2017 75% of mortgages will be arranged through advisers. This is a significant reflection of the changes that we have seen in the mortgage market since the MMR and the credit crunch, and of those that are to come. The important question is the reason why it has changed so drastically; for me the over arching reason is quite simply, ‘the value of advice’. Advisers are much better positioned to deliver the most appropriate outcome for a customer.
Recent regulation and policy changes are giving firms a framework and set of standardised practices which gives many firms confidence that they are meeting the needs of the regulator. The AR/DA argument still rages and while many advisers find comfort in the security of a network, an increasing number are going it alone, taking control and using the advantages that mortgage clubs provide them with. I expect that more and more firms will decide to become Directly Authorised over the next few years.
FR: How do you see the mortgage market changing over the next 12 months?
The biggest thing on the horizon is the implementation of the European Mortgage Credit Directive that will also bring into play a new regime for second charge mortgages. The MCD is complex and, as recognised by the FCA, implementation is likely to present ‘challenges’. Its impact on mortgage advisers has the potential to be highly dependent on the nature of the model each adviser operates.
Advisers should be thinking about areas in addition to the new second charge regime such as product and service disclosures, binding offers and reflection periods post contract; plus the requirement for advisers to be able to demonstrate the commission they could receive on every product they could feasibly offer to the customer across each lender. Another concern that advisers should be planning for is that this time there is no transition period, so any mortgage that has not completed by March 21st 2016, will have to be rewritten, which could have a substantial effect on advisers who are unprepared.
One of the main focuses for TMA over the next few months will be educating advisers on their new obligations for second charge mortgages. In conjunction with Shawbrook Bank we’ve created second charge academies for DAs around the country to arm them with practical knowledge to prepare for this new regulatory regime.
FR: What are TMA’s plans for 2015?
TMA has recently launched its ‘Inspired’ campaign which will run for the next three months. This lies at the core of our values and our ambition to ‘give something back’ to our members in everything we do. We have asked lenders, providers and advisers across the industry ‘what inspires and motivates them’ to do what they do. The premise behind this is that by inspiring people to remember what drives them, bringing their passion to the forefront, they can be more rewarded in the things they do every day; at TMA we will then use this knowledge to encompass their thoughts, passions and motivations to continually develop a mortgage club that DA advisers really need.
As part of TMA’s cause to champion DAs, we want to do what’s right not only for our members but for the DA population as a whole. For a club model to work for a DA adviser, it needs to have a strong proposition underpinned by a service that can tangibly demonstrate how it supports DA businesses. This can include creating commercial advantages for the DA, listening to what’s important and/or then using its strength as a club to champion and implement these changes.
Loyalty is a really big thing for us and all of our initiatives throughout the year are designed to help reward advisers that stay with TMA and use us regularly. Over the past 12 months we’ve seen a huge uplift in the number of advisers joining as we’ve been able to demonstrate our passion to grow DA businesses, while being a solid support and resource for them too.
FR: How important do you think the online experience is for brokers – do you think it is gaining significance in the industry?
It’s the same in whatever industry you are in; online technology is part of everyday life for most. Advisers rightly expect to search products, rates and proc fees online and then apply for the mortgage online. The online experience is imperative because clients expect advisers to adopt and embrace it; it’s vital that it’s up to scratch.
It is high time for an electronic process for the end-to-end mortgage process. Essentially the technology is there; lenders have the means to accept electronic signatures, and can communicate almost exclusively by email. There are also companies developing lender apps so that brokers and their clients have live tracking of mortgage cases. However, many businesses are still dealing with antiquated back office systems. The speed at which some are progressing technology is too slow; we really need everyone across the industry to come up to speed to fulfil clients’ expectations and keep the market moving.
Customers expect things to be done faster there these days, and don’t understand why the mortgage process still takes as long as it does in many cases.
FR: If you weren’t in financial services, what would you be doing?
I really enjoy what I do but if I wanted to do something else, I’d just go and do it!
