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Chilton on Mortgages

It is Monday, November 1, the day after M-Day. Since first thing this morning, the phone lines have been going flat out with journalists enquiring on how it is going.

The problem is that I have been so busy talking that I have not had time to find out but here is some anecdotal evidence of what is going on and what we can expect for the future.

As I write, a number of lenders’ intermediary websites are down, with impossible delays on phone help lines. I gather this also applies to the sourcing engines. Thus, for any whole of market intermediary, there are some real practical problems today with servicing our customers. I think we all expected this hiatus but slowly and surely things will calm down over the course of the week and by next week a lot of the firefighting will have been done.

For other intermediaries like ourselves, who have chosen to produce our own pre-sales KFIs, our problem comes with validating our systems. We, from a compliance perspective, want to check every live KFI with those produced by the lenders for a period of time. The problem above applies and we are doing our initial validation by comparison to the sourcing engines, which are at least open for business online, where many lenders do not have working facilities.

We have also been reviewing websites to see what changes are evident. I received a curious mailer , with a cartoon header from Portman, saying it now had full online KFI capability. It looked so odd that I had to contact the delightful Helen Shaw at Portman to ensure it was a valid Portman site. Helen confirmed this but I am curious to know why it contains a link at the bottom of the emailing to a broker website.

As for intermediaries, a quick review of major national players reveals a site under construction at Savills Private Finance, no change at Charcol or L&C as yet but a massive change at Alexander Hall. This is the first evidence of the clarity of fee-charging required by the FSA plus the potential costs of regulation having a direct impact on a broker.

Alexander Hall appear to have changed its model to fee-charging. However, internal inconsistencies within the site disclosures lead one to question whether, in addition to its standard admin fee, customers can opt to pay a full fee and get a rebate of procuration fees or whether this is compulsory. I would love to say with confidence that this dichotomy will get sorted out but it has have been running fee-free advertising for some years now, with the small print excluding anything but house purchase.

So where will the battle grounds and winners and losers be over the next week?

I suspect that the PR war is going to be fought over what independence really means. Thanks to the FSA, a limited-panel intermediary, who may charge usurious fees and incentivise its consultants on the basis of their fee income, can continue to call itself independent.

A fee-free broker who charges no fees, covers the whole of market and whose consultant remuneration is totally independent of procuration fees, is no longer independent in the eyes of the FSA Probably the best solution is to get the Oxford English Dictionary to change the definition of what independence really means.

Mark Chilton is chief executive at Purely Mortgages


D-Day dodgers

With the approach of D-Day – December 1 – the minds of tied and independent advisers should be straying towards the consideration of their regulatory status in the newly depolarised world. Depolarisation offers advisers the options of being whole of market, limited choice or single provider. Currently, of course, there are only two choices -IFA or tied adviser.

That’s life expectancy

In my last two articles, I examined two of the main risk factors that must be taken into account in recommending pension drawdown contracts to clients – interest rate risk and the risk of investment performance falling below expectations.

Multi-Manager View

We have a growing range of multi manager offerings which, once you have scraped off the label, all seem to look exactly the same. Apart from their charges and funds, they all appear to have a very similar style.

AIFA’s View

I think this is my penultimate column for this esteemed organ. It is about time I threw all my toys out of the pram and let off a bit of steam. So let’s hear it for Smee’s gripes and groans (episode one).


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