With the regulation making advice a requirement of the vast majority of mortgage sales many lenders may feel that the cost of providing sales in branches, via the phone and on-going supervision and management of staff responsible for these advised sales is likely to become prohibitive.
As a result the direct channel will become less cost-effective and many are likely to turn to intermediaries to pick up the slack. Recent figures from the Council of Mortgage Lenders seemed to bear this out suggesting that the shift may already be underway.
According to the CML intermediary market share has increased from 53.5% in Q1 2013 to 57.5% in Q2 2013.
Stephen Smith, Director, Housing and External Affairs, Legal & General Network, says:
“We are seeing very clear indications that lenders are starting to favour intermediary distribution channels. Although you could point to capacity constraints as a reason for this shift we believe that MMR is a significant factor. The real impact will be made clear in Q1 and Q2 next year as lenders deliver their new capabilities but the recent spike highlighted by the CML is unlikely to abate as the new rules make the role of advisers more central to supporting lenders and borrowers alike.”
