View more on these topics

Mark Chilton on mortgages

It is reckoned that you hit the wall in a marathon after 22 miles. How appropriate that something concerning mortgage practitioners hits their desks on the 22nd and many hit their own personal wall. I am referring to this month&#39s deadline for applications to ensure FSA approval for Mortgage Day.

Anecdotal evidence suggests that, given a handicapped finish, the mortgage team is running ahead of the insurance mob and that independent brokers are at the head of the group.

Many of the premier league brokers are wondering which way to turn at Canary Wharf, with fundamental issues such as whole of market still unresolved. There will undoubtedly be an unholy rush for the line to meet the midnight cut-off but I suspect a significant set of appeals to take place.

Much press activity in recent months has been given on whether networks will gain the lion&#39s share of the independent broker market.

Current opinion is strongly moving in the direction of direct regulation being the majority. I think this is likely to be right. As I have often observed, our market is deeply fragmented and the FSA&#39s approach to regulation has exposed an interesting additional divide. The turnover benchmark of £1m creates its own chasm.

The vast majority of independent mortgage intermediaries fall below this barrier and the application process for these businesses which miss the annexe requirements for corporate and regulatory business plans are benign. Application is straightforward and the support provided by John Tiner&#39s new regime is laudable. Quite correctly, the majority of such businesses are opting for the direct regulation route.

Above the threshold, there are probably no more than 10 firms in the UK which have the vaguest concept of proper corporate governance and even they are struggling to submit applications on time. What hope is there for the firms that fall between these two stools?

In London and the South-east, there are myriad businesses of a few brilliant brokers and no corporate sense whose turnover exceeds the £1m threshold. For many of these, the implied and explicit language of regulation is as alien as starting the marathon in Marathon.

If the start is hundreds of miles away and running late, the real nightmare will come at the second wall. That is when the first regulatory visit happens and reality bites for most of these business. Who is going to help? It is another strong motive for consolidation but it just may be that this starts at the higher end of the market rather than the mass end simply because of the differing perception of risk brought about by the FSA benchmark.

Already, there is a lot of restlessness in the B-list firms and the existing majors cannot cope with acquiring historic risk at this stage of the cycle. I am not sure where it is coming from but a new solution will emerge as either a specialist high-end compliance network or a new consolidator.

Mark Chilton is chief executive of Clearly Financial

Recommended

NU says strength comparisons are misleading Govt move to change wind-up priority

The Government says its decision to change the priority order on pension wind-ups will help to ensure that pension savers do not lose all their entitlements if their scheme goes bust. Under pressure from backbenchers calling for compensation for 60,000 wind-up victims, the Government has said it will bring in laws to ensure that pension […]

Bankhall buys NU&#39s mortgage club

Bankhall has announced the acquisition of Norwich Union&#39s mortgage club, with the sale expected to be completed by May, 2004. Currently the fourth biggest club in the UK with 35 member lenders and 7,000 intermediaries signed up to it, NUMC joins Bankhall only months after the support services provider acquired Prudential&#39s much larger mortgage club. […]

Resilient offshore sales recovering

Total offshore life sales fell by 18 per cent last year to £6.8bn APE from £8bn in 2002 according to figures from the Association of International Life Offices. Worldwide sales of singlepremium products totalled £4.5bn and regular-premium business was £2.40bn. But the Ailo says the underlying trend through the year is up, with figures for […]

BM Solutions appoints new London account manager

BM Solutions has appointed Helen McGrigor as key account manager for central London. Prior to joining the UK&#39s biggest specialist lender, Helen spent six years at Bradford & Bingley subsidiary Mortgage Express. She has also worked in senior sales roles for Yorkshire Building Society and Bank of Scotland respectively. McGrigor will be the first point […]

The Rubik’s Cube: China’s policy trilemma

By Douglas Turnbull, Investment Director, Head of Chinese Equities China faces a ‘Rubik’s Cube’ policy trilemma, whereby it needs to sustain a minimum acceptable level of growth, deal with issues such as overcapacity and reform the financial system to make it a far more efficient allocator of capital. Given the contradictory nature of these objectives, […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com