"The work of mortgage brokers has become even more important, and there is a clear imperative for brokers and lenders to work effectively with one another."
Two and a half years after the introduction of MMR in 2014, both are "broadly content" about how the new regulatory environment has defined their roles.
When questioned, both lenders and brokers acknowledged that the needs of the customer are most important, with the lenders also acknowledging the critical role that brokers have to play in the post-MMR marketplace – particularly when it comes to arranging mortgages for non-standard borrowers.
The lenders and brokers agree that this complexity has made the intermediary channel more attractive than it has ever been, and the share of mortgage lending conducted through the channel reflects this, having risen to nearly 70% from 50% in early 2012.
The relationship between the brokers surveyed and lenders remains strong however brokers, keen to provide an ongoing service to clients, raised questions about who owns the customer relationship and when lenders should get in touch with their customers over product renewals or transfers.
Equally the question of procuration fees for product switches continues to be aired, with many lenders showing movement on this particular point.
The lenders and brokers are broadly supportive of ongoing initiatives to roll out best practice across the whole industry. Both felt that the IMLA-AMI Lenders and Intermediaries Governance Framework has improved the clarity around the process of removing brokers from lender panels – which was previously opaque. There is also agreement that the Working Together document, to which IMLA, AMI and the CML have contributed, will also help to clarify how brokers and lenders interact with one another.
There is also support for the senior managers’ regime, which will come into force in the intermediary sector in 2018-19. Both groups feel the regime will help enforce good practice in the sector by giving responsibility for broker behaviour to senior intermediary managers, thereby diminishing the need for individual broker registration, which the FCA lacks resources to drive forwards.
Peter Williams, Executive Director for IMLA, commented: “The mortgage market has become much more complex in recent years, following several waves of regulation, while the number of non-standard borrowers has also increased. As a result, the work of mortgage brokers has become even more important, and there is a clear imperative for brokers and lenders to work effectively with one another.
“It is therefore encouraging to see that leading brokers and lenders are positive about their relationship, and clearly feel there are solid foundations on which it can grow further. Both groups firmly believe that the needs of the customer are paramount, and are supportive of innovations that can help meet these. There are some areas of discussion between brokers and lenders on subjects like procuration fees and customer retention strategies. However, the paper demonstrates that there has been increased dialogue between the two groups about these, which is a very encouraging start.
“It is very encouraging to see support for initiatives like the Lenders and Intermediaries Governance Framework and the Working Together document. These schemes will help improve the working relationship between brokers and lenders by spreading best practice across the entire industry, and help the sector to meet the needs of an increasingly large and diverse customer base. Schemes that bring brokers and lenders together like these are good for the health of the sector, and should be actively encouraged."
