By now, many of us in the mortgage industry were expecting to see the outcome of the feedback submitted to the FSA mortgage market review consultation papers in March.
The FSA had initially suggested that by this summer we would be working through the final outcomes. There were about 120 submissions from the advice industry, mortgage lenders and key trade bodies, which have clearly given the FSA much to think about. At the time of writing, there has been no further update from the regulator. I can only assume that a number of issues have emerged that require additional time to resolve prior to the final rules being issued.
These issues for further debate are likely to include the following:
Advice versus non-advice
Lending into retirement
The transitional arrangements
There are likely to be a few other areas where specialist lenders require further clarification to ensure their areas of lending can continue without any issues.
At the Mortgage Business Expo in Manchester in May, Lynda Blackwell of the FSA commented that there would be no watering down of the advice aspect in all mortgage discussions with clients. I am sure this will create a huge amount of debate within many lenders’ offices as the implementation of a full advisory service will have huge implications, not just for new borrowers, but for all existing mortgage borrowers on their books.
On the basis that advice throughout the whole mortgage process will probably be implemented towards the tail end of next year, all intermediaries now have a tremendous opportunity to ensure they build strong relationships with their clients and lenders from now and long into the future.
Part of the relationship with lenders is now of significant importance as all the major lenders are now introducing stricter submission requirements. These new metrics mean that lenders are monitoring the whole application to ensure that intermediaries fully understand their procedures, underwriting processes and lending criteria.
Intermediaries must now adopt and adapt to the lenders’ requirements, otherwise applications will be returned and intermediaries are at risk of being removed from lender panels. This may all seem a very draconian measure but lenders now have little option but to implement what they consider to be the FSA’s requirements under the conduct of business rulebook.
It was David Copland of LSL who said a few months ago: “Brokers who do not satisfy a lender’s due diligence may not get access to mortgage funding in the future, regardless of their status as a DA or network member.” All of us working within a network and distribution environment now fully understand these words.
Of course, as time ticks on and a summer response moves into autumn, a potential implementation date of late 2013 will become more unlikely. However, on the plus side, that at least gives us more opportunities to discuss the issues that will impact on intermediaries as we progress through the remainder of this year.
John Malone is executive chairman of PMS