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The industry had its latest insight into the FSA’s thinking last week, with director of small firms Lesley Titcomb presenting at the Council of Mortgage Lenders’ annual Regulating Mortgages conference.

The only way I can describe the reaction at the end from a very well represented industry was a deathly silence. Either it was what we were all expecting or more shocks and surprises than a Christmas cracker.

It is difficult to assess what is good or bad sometimes. Let’s talk product first. Is it a good idea to ban self-cert/fast-track/non-verification of income? Broadly, all are lumped together now. Are we not disenfranchising ever bigger numbers of the population? Or, together with the disgracing of sub-prime, should society start talking about painful truths.

Homeownership was overstretched and over- promoted. There are sectors of society for whom this dream should stay exactly that or risk it turning into some sort of nightmare. In many instances, people on low incomes were only ever able to get on to the property ladder via self-cert or sub-prime loans which, in turn, relied on property price appreciation to build an equity cushion to allow these borrowers to refinance before the cost of the debt (and their other debts) caught up with them.

Politicians were equally to blame for this, indeed, castigating our industry for not making it even easier by throwing the mortgage net even wider. Remember the calls to help FTBs on to the property ladder?

Rightly or wrongly, mortgage finance is going to become more “exclusive”, the preserve of the better-off in our society. This message was loud and clear from the FSA this week.

In turn, are we now to expect Government initiatives to roll out a comprehensive social and council housebuilding programme to house those less able to cope?

Fraud also appeared high on the FSA’s agenda. Advice has become a very thorny issue. First the good news – it does not appear that lenders will regulate the intermediary, probably because lenders are as much in the dock at the moment as brokers. But it does appear that some version of the RDR/authorised individual regime is bound for the mortgage market.

Before Mcob, the debate was all about DA v AR distribution. With last week’s announcement of Sesame’s purchase of Bankhall/PMS and the success of networks such as Intrinsic and Personal Touch, that argument appears over.

Thanks to the banking crises, it appears that a by-product of this will be the end of small and most big independent mortgage-based brokers.

The new order is emerging – banned products (one way or another), more regulated advice, (far) higher capital requirements.

We shall look forward to welcoming Tesco and Virgin to our market in a far more significant way than we have seen in the past and let us not forget some of the real winners such as Santander. This bancassurer model looks set to be the most successful business model in these times.

PS: Well done to Nationwide for its latest initiative. Nothing like the discredited Rock or HBOS product, this is a brave proposal in these crazed times designed to offer a real solution to a real problem now.

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