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Do mortgage packagers have a future or will lenders and brokers

fulfil the role of packagers themselves using improved technology?

Snowdon: Packaging mortgages properly is not just about increased

technology. It is also also about understanding lenders&#39 criteria and

submitting the correct documentation so that they can consider the

application quickly and efficiently without having to refer back for

more information.

Those brokers who are equipped to do so are already packaging. With

regard to lenders, it depends on their business philosophy. Some will

prefer in-house packaging and some will prefer to outsource this

non-core activity. At Verso, we use a mixture of the two methods.

Smith: With continuing pressure on margins in all aspects of

financial services, it is inev-itable that lenders will want to

automate and delegate admin services as far as possible. In the short

to medium term, this may benefit packagers but in the longer term,

with more sophisticated valuation and credit-scoring tools, much of

this work can be done automatically and in an ideal world this would

be by the broker at the point of sale.

Court: Many lenders are already reducing the number of packagers they

deal with and improvements in technology will probably reduce the

need for packaging in the future.

Will the planned Association of Mortgage Packagers have any weight to

lobby the regulator and influence the future of mortgage advice

regulation, as it says it intends to do?

Snowdon: No trade body will have any credence unless it can

demonstrate that it truly represents the interests of the majority of

operators in its particular field. This means that, for a trade body

to carry weight with a regulator, it must have the majority of

relevant firms in its membership. Regardless of whether a packagers&#39

association gets off the ground, a bigger issue is the regrettable

lack of progress in setting up a body to represent mortgage brokers.

Smith: All informed voices that wish to contribute to the debate

should be welcomed. The extent to which they can influence will be

measured by whether they are talking sense in light of the

regulator&#39s wish to improve consumer choice and information.

Court: Any trade body which involves itself in such lobbying will

probably have more impact than individual firms could hope to have in

their own right. Clearly, though, such a body would only be one of a

number of interested parties trying to influence the ultimate shape

of mortgage regulation.

Do you think one common trading platform for mortgages will be

achieved or is there more likely to be a split between the two

biggest ones – IF Online and Mortgage Brain?

Snowdon: Competition is one of the great strengths of the UK mortgage

market. It is neither desirable nor likely for one platform to corner

the market. Abbey National&#39s recent stake in IFonline shows that as

long as diversity is seen as a business opportunity (to say nothing

of competition-authority issues), then monopoly is unlikely.

Smith: Any organisation that sets out to produce one common trading

platform will probably fail – the industry has a pretty poor track

record on working together in this area, after all. In addition, as

in most areas of business, competition is good and provides the

stimulus for improvement and the maintenance of standards.

Apart from the two listed, the direct links between lenders and key

intermediaries that exist will also play a role, particularly where

both parties can see a benefit to their business volumes, and other

organisations, both current and new, will doubtless have their plans.

Court: It is more likely that there will be at least two suppliers of

this functionality.

Do you think there will be any losers when the FSA starts to regulate

mortgage advice in 2004 and, if so, who will they be?

Snowdon: It is very hard to say as proposals are now back in the

melting pot. The requirement for practising mortgage advisers to be

fully qualified with effect from January 2003 may well see some

“losers” in terms of brokers who cannot or will not pass the exams

being excluded from the market. But this will strengthen the sector,

not weaken it. It will also pave the way for the FSA regulation of

advice as we can be confident that those introducers remaining in the

market will be both committed and competent when it comes to giving


Smith: Firms that have not got their act together on the existing

MCCB requirements will be the losers but they will hopefully be few

by the time this formal regulation comes into force. Between now and

then, mortgage advice will have already been shaken up by the

requirements for qualifications and fitness and competency that are

now part of the MCCB regime.

Court: The precise areas of impact are hard to determine until we

know the exact form the regulation is likely to take. Clearly, this

will be a significant additional burden for introducers and will

probably result in further consolidation in the industry.

Why do you think the Treasury made the unexpected decision that the

FSA will regulate mortgage advice?

Was it primarily due to lobbying by the CML, as it is claiming?

Snowdon: Of course, the FSA cited European issues and the DeAnne

Julius report as a major factor in its U-turn on mortgage advice.

However, it would be very surprising if the tremendous lobbying led

by the CML, supported by individual lenders – who all took a lot of

time and trouble in researching and submitting their own responses to

CP98 – failed to register on the FSA&#39s radar.

Smith: There were very many parts of the industry that played a role

in challenging the original proposals. The CML was certainly

eff-ective in showing that the lending industry presented a united

front but the criticism in the DeAnne Julius report on codes was

probably the major factor in the Treasury taking a second look at the

CP98 proposals.

Court: CML lobbying played a significant part, together with

individual responses to the consultation. EU legislation, to the

effect that all general insurance would have to be regulated by

statute, may also have been a significant factor.

How do you see the future of the CML and MCCB with the FSA regulating

mortgage advice?

Snowdon: The CML has no jurisdiction over brokers and the advice they

give nor does it represent them. It is a trade body for lenders and,

as such, will continue unchanged.

With regard to the MCCB, I hope that the FSA will want to incorporate

its structure and practice into any new framework rather than

scrapping it.

Smith: The MCCB has done much to improve the standard of mortgage

advice being given in the UK and to improve the professionalism of


It is to be hoped that the FSA regime, when it comes in, builds on

this good work but maintains a light touch to this area of regulation

so as to ensure continued widespread availability of advice and

competitive products. The CML itself will have a continuing role to

play as an active and effective trade association for lenders.

Court: It seems likely that the MCCB will ultimately be subsumed into

the FSA. The CML existed as a trade body long before the Mortgage

Code, and will doubtlessly continue to fulfil this role after



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