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Heading for a fall

As the mortgage industry moves into 2006, more than a few people will be relieved that M-Day did not bring the end of the the world, mortgage business is still being transacted and FSA regulation has probably not been as unpleasant as many imagined.

In light of several recent announcements, it would appear that the FSA is gently raising the bar for mortgage firms, particularly in the area of record-keeping which makes a compelling argument for the use of technology at the core of any well organised mortgage practice.

Just a few years ago, dedicated client manage-ment software for mortgage advisers was virtually non-existent. Mortgage brokers either had to rely on limited database functions within mortgage-sourcing software or mortgage areas within systems that were primarily designed for investment advisers such as those from 1st Software, Intelliflo, Plum and Quay. There now around six dedicated mortgage client management systems on the market.

Such solutions should be seen as the key to future business efficiency for mortgage advisers and lenders would do well to maximise their integration with these emerging players.

One of the major challenges for the mortgage market this year will be to come up with an acceptable compromise on how to enable mortgage-sourcing systems to reflect fully the affordability criteria being operated by different lenders.

There would appear to be a deliberate strategy by some lenders to withhold information so that once an adviser has submitted an application for one product, the lender can then decline the advance on the basis of the original product and cascade down to a less attractive product.

Advisers should, of course, carry out a full review of all the products available across the whole market. The problem is, if you withdraw and resubmit, what are the chances that the next lender will not try the same cascade approach?

It is not difficult to see how consumers could believe they are being disadvantaged and it would be far better for lenders to work with the sourcing systems and others to devise a practical long-term solution to the affordability issue as any short-term gain they may make from cascade arrangements is likely to be cancelled out many times over by regulatory fines and FOS compensation.

The research team at my office is conducting this year’s mortgage e-excellence research which will examine in detail the services and functionality being delivered by lenders, measured against requirements we have identified with leading mortgage advice firms, to identify which lenders are really meeting the needs of the adviser community.

From our preliminary discussions with lenders, it is clear that far more resources are presently being allocated to e-commerce.

When we conducted the 2005 mortgage study, it was apparent that many lenders were still catching up with meeting elements of their regulatory obligations. It is now clear that there is intense competition between lenders to deliver e-commerce solutions.

As reported in Money Marketing, Abbey became the latest lender to move to electronic applications following, among others, Halifax and Alliance & Leicester.

Electronic applications are a positive move but systems need to be easy for advisers to use if this is not to become a barrier to placing business. It is essential that lenders deliver technology that provides real benefits to the advisers and not just reduces the cost of the lender getting and processing applications.

In this industry, good reputations are hard fought and easily lost so any lender that has had problems with its online systems may suffer a significant hangover period after the introduction of improvements before they gain brokers’ confidence.

Our ratings will appear in the Money Marketing Mortgage e-excellence supplement on March 16. It is fair to say that from the workshops we have carried out that Abbey has attracted more negative comments from advisers than any other lender.

Those who are familiar with the e-excellence ratings will know that, unlike others awarded in this area, they are based on an objective scoring matrix of features rather than subjective and emotive reactions which may well be based on previous adverse experiences before system enhancements may have been delivered.

If Abbey scores well in the ratings, this may help it to convince advisers that any problems with its services are in the past. On the other hand, if Abbey scores poorly, this would suggest that its move to an electronic-only environment may be a little hasty.

Despite all the negative comments that we have had from advisers concerning Abbey’s online service, its offering has not been causing the most amusement in our office in recent weeks. This honour must go to The Mortgage Business. Anyone who wants a good laugh or an object lesson in how not to build a lender website, should go to www.

Among the howlers you can find here are a range of different downloadable documents such as money-laundering forms and submission forms all in raw Excel or Word that could be easily edited once downloaded. Do these people know nothing about document security?

There is also an affordability calculator which is posted with clear statements that it will not work with certain versions of Excel. The calculator states that if you have any problems, you must have the wrong version of Excel. It could not possibly be the company’s fault.

This also contains macros without a signed certificate to confirm they could be trusted. Given that macros have in the past been such a common way for virus writers to proliferate their infections, this is hardly an example of good security.

Although clearly marked for use by professional advisers only, in a regulated environment, I cannot help but question the wisdom of putting such documents on websites with nothing to restrict consumers from accessing them.

I must admit that I cannot really understand why elements of the site are still offered as the company also has a site at which appears to offer online and offline application services, mortgage decisions, tracking services and updates, that is, many of the things that one would expect a forward-thinking, adviser-focused lender to deliver via its online service.

Any lenders which have not yet had their mortgage e-excellence survey should contact Poppy Morgan on 020 7863 0863.

A list of client manage-ment systems for mortgage advisers can be found under the Information for Financial Advisers” section at More information on the mortgage e-excellence research can be found at /


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