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Inside edge

Regulation of mortgage advice and William Young winning Pop Idol share one similarity. I voted for both but did not really believe either would happen.

The Treasury about-turn on regulation was undoubtedly a significant change for the industry. Although the majority of the market was opposed to lender responsibility and monitoring, and in favour of regulating mortgage advice, very few believed the Treasury would actually change its stance.

Could the opinion of mortgage professionals have swayed the Government&#39s view? If yes, then the Treasury should be applauded for having the courage to change its mind.

What do we have to look forward to? In March, the FSA will publish a guide for intermediaries. This will be followed by a consultation process regarding the new business conduct rules before final rules are published in the second half of 2003. The next stage is full authorisation of mortgage advice in the second quarter of 2004.

The near panic experienced by lenders last year came about because the N3 implementation date crept up on them. Advisers must not allow the same thing to happen this time.

Lender responsibility for mortgage sales threw up a variety of issues such as data validity, multiple competitor comparisons and intermediary monitoring. For advisers, this had frightening implications. We calculated early last year that, even if advisers were using a restricted panel of 25 lenders, an entire working day could be lost to lender monitoring visits each month. An sigh of relief was heard in December when the rules changed.

What of the practicalities of regulated advice? It may seem strange that advisers have welcomed the move but they have never shirked responsibility and take comfort in being masters of their own destinies. Additionally, announcements on the future of polarisation should have only a limited impact if it is the process and not the person which is the target of regulation.

Mortgage intermediaries are a flexible group and, if the outcome of the consultation is clarity and consistency for both advisers and consumers, then we should all thrive.

What does look likely is that the suggested pre-application illustration will survive. A quick look at what has happened in Europe suggests this. In Europe, they have focused on information provided to consumers and sought to introduce a consistent document. The European offering may differ in name to our pre-application illustration (the European suggestion is European standardised information sheet) but the characteristics and intentions are closely aligned. This suggests a pre-application illustration is inevitable.

It would be appropriate if we went some way to aligning our policies with Europe as long as we restrict the length and complexity of the document. Most clients probably study a brochure for a new TV in greater detail than a one-page summary of their mortgage offer. I do not see how lengthening this document to five, 10 or 15 pages will help to resolve the problem but am prepared to be convinced.

Working in a technology company for the past year has made it very clear that none of us can afford the luxury of a wait and see approach. We have been lucky because our systems and software are equally relevant for use by lenders or advisers but we should push for an early directive.

I also hope that new regulation will act as a catalyst for an increase in technological solutions, not just for the benefit of technology companies but to streamline normal working practices. The huge risk I see with onerous regulation is that brokers lose client time. Professional advisers add value when sitting in front of a client, not when they are on the phone chasing a lost application form.

The streamlining of processes is where technology can make life easier for us all. Clients seek professional advice because they need help. Let us hope sensible regulation will allow advisers to do just that.

Richard Hurst is the marketing manager for IFonline Group including Trigold Software Solutions.


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