How time flies. We are well into February already and 26 April is fast approaching.
The significance of that date will not require any further explanation as it heralds the biggest change witnessed in the mortgage industry for 10 years: the mortgage market review.
Unlike its big brother, the RDR, that came into force at the beginning of 2013, the MMR is experiencing a significantly less adversarial countdown. Instead, the sector appears to be taking it in its stride, with it seen by many as a genuine case of ‘evolution, not revolution’.
With the emphasis firmly focused on the public, the overall reaction within the mortgage adviser community has been generally positive. Many, rightly, see it as an opportunity to drive professionalism and influence the sector’s future agenda.
Key to this is the value and importance the MMR places on the need for advice, given that a mortgage is one of the biggest financial decisions people make in their entire lives. Post-MMR, the vast majority of mortgages will quite rightly require an advised sales process.
Greater use of technology will naturally be a vital tool in the new landscape, as advisers and brokers gear up to meet the new challenges and opportunities the changes in regulation will present.
There will be an inevitable amount of adjustment and even upheaval in some quarters, yet there seems to be a consensus that it will result in a more refined, positive agenda that will put the industry firmly in the driving seat and enable those who work in it to take advantage of the exciting, revitalised opportunities that lie ahead.
Once implemented, the MMR will highlight the breadth and depth of services provided by advisers, helping to put them on a par with their counterparts in the investment sector.
This will not be restricted to mortgages alone. Those selling protection and working in other ancillary sectors will also benefit from the resultant ripple effect.
Consequently, there seems to be a general realisation among all the businesses and organisations who will be involved that they have a vital part to play in helping to drive the process. And not just for the obvious regulatory needs – but through a desire to better serve the consumer and society in general.
My view is that mortgage clubs, networks, lenders and small practitioners will collaborate more prolifically with each other for the greater good, as indeed will the sector’s trade and professional bodies. I think it is fair to suggest that relationships between lenders and brokers will become more important in the post-MMR environment too. Both would surely benefit from increased two-way dialogue.
However, the nature and scale of the changes proposed in the MMR cannot be underestimated and other factors will influence the way things unfold.
On one hand, experts estimate the mortgage market could grow to more than £190bn this year – but scalability of systems (the current increase in borrower demand is already stretching some broker firms to the max), could be an issue for firms. And, of course, there’s the well-documented housing shortage. So it will not be plain sailing.
But the FCA will allow firms at least 12 months to implement the changes and the Society of Mortgage Professionals, is developing a framework to support members with the transition and put the sector on par with other professions to help it gain the recognition it deserves.
Keith Richards is chief executive of the Personal Finance Society