M-Day is very nearly upon us, just over a month to go and counting. While mortgage regulation itself is close, the KFI debate being held would seem, to any uninformed observer, to be a long way from drawing to a close.
It is only right that acres of newsprint and months of debate have been dedicated to both mortgage regulation and the topic of KFIs. It is important that change on this scale is debated openly for two reasons.
First, there are many stakeholders in the massive change that is mortgage regulation and, sec- ond, it is a useful education process helping to keep us all informed on developments as they happen. This is particularly true of the KFI situation.
Inevitably, the debate has, at times, not been without confusion. As I write this piece, there has been much comment on the accuracy of KFIs. In the last couple of weeks, we have affirmed our own position which is consistent across the five HBOS mortgage brands, Halifax, Bank of Scotland, Birmingham Midshires, Intelligent Finance and TMB.
By doing this, we have given clarity and peace of mind to intermediaries dealing with our five mortgage brands that there is a consistent and recognisable policy in place.
HBOS took the step of confirming that we will guarantee any KFI generated online via any of the web-based systems operated across our five mortgage brands. This message has been well rec- eived by intermediaries, nearly all of whom choose to conduct their business online and see a KFI generated in this way as the natural progression towards regulation.
The speculation and debate surrounding the accuracy of KFIs available via the sourcing systems also continues to roll on.
Again, the HBOS position is simple. The five brands within the group will make every effort to support sourcing systems in providing a compliant solution. However, at this stage, verifying product data on every sourcing system in the UK is simply not feasible.
Consider how many sourcing systems are in operation, the product data they hold, the frequency with which that data changes and you begin to understand why this is not a single party issue. It requires common working to find the most feasible and practical solution.
Those sourcing systems which want to offer a compliant solution and lenders interested in this important distribution channel will work together to try and find a mutually convenient solution. This is exactly why we have been in discussion with a variety of sourcing systems to try and establish exactly how we can achieve the most satisfactory arrangement together.
Let us not forget our customer in all of this. Hopefully, the reality will be that most borrowers will see very little difference following the introduction of mortgage reg- ulation on October 31. The major benefit for most borrowers will be the introduction of a standard format – that is, the KFI – to provide all the relevant information about the mortgage product being considered. It will ensure that customers are aware of all the costs associated with the mortgage, are able to see the implications of future rate increases and give an ind- ication of how any such increases will affect their monthly repayments. This is all vitally important information when choosing a mortgage.
Together with product data, this information will be presented in a standardised format, enabling borrowers to have the important ease of comparison when choosing which deal to opt for.
This is exactly why HBOS confirmed that, across our five mortgage brands, we will disclose to consumers all payments made to mortgage intermediaries and associated third parties (including mortgage clubs and packagers) on our KFI documents.
The KFI could be described as the “axis” of regulation for many borrowers. It is the point at which regulation will make its most tangible impact on a borrower's choice and so they should, therefore, be able to see all of the costs associated with their mortgage application and be confident that the KFI presented to them by an intermediary is accurate.
That is why HBOS is playing its part in helping to make this happen and providing as much support to intermediaries as possible.
Phil Jenks is head of mortgage strategy at HBOS