The event, held in King’s Cross this morning, saw Sinclair explore the toll that the European directive will have on the mortgage market as well as answering questions from the lenders and distributors present.
With little over a month until firms can choose to switch over to the MCD rules, Sinclair pointed out that most people were ‘nowhere near ready’ to do so compliantly, adding that the biggest issue is was the scope of service offered.
He said:
“There has been lots of noise about having to offer second charges to every customer and of course, they will now fall under the same routine. It’s true that if you want to call yourself independent or say you offer whole of market, you will have to offer second charge.”
He went on to speculate, however, that many brokers not willing to look at second charge mortgages will eventually ask customers from the outset if they were happy not to consider them, adding that this ‘doesn’t stop the broker from passing these cases on – it just won’t fall under their scope of service’.
He went on to say:
“There are lots of choices out there for how firms will begin to engineer this and certainly most of the networks and larger firms are a long way down the road towards making these decisions. My big worry is there are a lot of small brokerages out there who aren’t very close to making that decision.”
He also considered the issue of disclosure, and going back to the pre-MMR method of giving customers documents, and whether these changes would once again affect smaller firms more drastically.
Sinclair said:
“Under MMR, lots of the changes to processes were being driven by lender change; a lot of this new change is going to be something broker firms are now going to work out and do themselves. Big firms have compliance departments who can handle these issues – but my worry is that the ‘one-man band’ firms might not be in a space where they’re going to be compliant come next year.”
