Doing a reasonable imitation of Shere Khan from the Jungle Book, the FSA has put itself forward as a user-friendly regulator, suggesting there is no need for mortgage advisers to have a third party in the regulatory relationship. This might have been vaguely believable were it not for the fact that this is the same FSA that one IFA firm has recently appealed to the European authorities over its excessive zeal.
Just as the onset of regulation in the investment market made networks dominant players in life and pension product distribution, so the mortgage networks will have a major role in the future of the mortgage market. There are a plethora of mortgage networks and we are going to see significant consolidation with probably only a handful of current players surviving.
Outside the mortgage networks launched by established investment networks and support groups, plus perhaps Legal & General, it is difficult to say who the obvious survivors will be. One of the significant factors will be the extent to which any new network embeds technology in its processes. It is widely recognised that the FSA's version of mortgage regulation adds nothing to consumer protection but is all about putting ticks in boxes to say that things have been done.
This is an approach that very much lends itself to software-based compliance. Given the size of the mortgage market, it has always surprised me that we have not seen more dedicated broker mortgage administration systems emerge. Most of the main IFA client management software packages have had mortgage modules these have, for the most part, been bolt-ons rather than systems dedicated to mortgage broking.
In the past, mortgage software has been dominated by sourcing systems and these again have had relatively limited functionality for administration, particularly as far as the ongoing client relationship is concerned.
Regulation has changed the scene dramatically. All the main sourcing systems now include compliance modules and both 1st Software and Quay have significantly enhanced their mortgage processing capabilities. The former is launching a dedicated mortgage sales processing tool that integrates not only to Adviser Office but has the potential to work with other CRM packages. The latest release of Sesame Office has extensive facilities to support both mortgage and general insurance processes.
We have also seen the emergence of a number of new companies producing dedicated mortgage broking software products. In April, I wrote about the Dashboard product from Nereus Infotek. Another new entrant has been the Momentum system from Crystal Software Solutions. This has already been adopted by Mortgage Intelligence and Mortgage Next and last week Legal and General said it use the package to support an end-to-end electronic process for their appointed representatives under their mortgage partnership from November 1.
Momentum has been developed using the latest .Net technology from Microsoft. This is primarily an online application but it does allow a limited amount of offline functionality so an adviser can complete applications with a client in their home without needing internet access. This has been achieved by the system allowing an XML message to be sent from the main online package to a briefcase function that allows data to be collated offline and returned to the online package when a connection is next available.
Initially, the package manages the mortgage process from lead management, through production of the initial disclosure document to completion of a mortgage fact-find. It then allows the user to access pre-population sourcing tools with the option to use Mortgage Brain or Trigold. Momentum only uses the sourcing tools for their quote engines with all other functionality subordinated to the Momentum package.
For life insurance quotes, integration is provided to AssureWeb and Webline, general insurance quotes are provided by the Source with the additional option of Payment-shield and Millennium for accident, sickness and unemployment cover. Training and competence users can integrate the excellent Competent Adviser package. Unfortunately, there are currently no links for designated investment illustrations. Crystal Software say demands' and needs' statements will be in place in time for general insurance regulation from January 15.
All illustrations obtained via sourcing tools are stored on the system in the long term and the adviser can select a particular illustration to create a recommendation around. Applica-tions can be submitted via either the Mortgage Trading Exchange or Trigold's Electronic Trading Centre depending on which lender has been selected and the platform they accept submissions from.
This is a further reminder that the adviser community is still suffering from the fact that most major lenders are available on one platform or another. It is time this issue was resolved. It would be preferable if the lending community could address the matter before the competition authorities start looking at it.
One feature that will be attractive to mortgage networks is that when a case is submitted electronically a parallel data message is submitted to the network. The sys- tem is also sufficiently intuitive to identify that if a material fact changes that only affects one type of regulated activity, only that type of activity has to be requoted. For example, if you change the client's smoker status in the fact-find, you have to requote for the life cover but not for the mortgage. Overall, the package seems to have a number of attractive features and it will be interesting to see how it develops further.