View more on these topics

Quality street

Today’s self-doubt and procrastination in the mortgage market can be directly traced back to the “jam today” ethos of mortgage firms, happy to ride the gravy train even though they knew it would come to a sudden and abrupt halt.

We can now consider ourselves well and truly stopped in our tracks. The harsh realities of the future mean there will be (indeed already are) fewer lenders with less money for borrowers, a declining number of distributors and a sharp reduction in desirable customers. We will be waving goodbye to the packager phenomenon.

It is an interesting to reflect that while the financial services industry of 20 years ago is usually remembered as something akin to the Wild West, manufacturers and distributors were happy to pay a bonus for the volume of quality business written by the intermediary. And back then, a good client was someone who paid their premiums and payments every month.

When and why did this focus on quality of business become surplus to requirements? What did we know in the 1980s that we do not know today?

As our industry giants cautiously begin to re-establish their market position, it falls on mortgage intermediaries – responsible for 70 per cent of sales – to rebuild confidence in our market. But the rest of us specialists and suppliers have to support their efforts with a concerted focus on quality instead of quantity.

Regulators, lenders, distributors and customers will all be in pursuit of this common denominator, although the question remains: have too many firms cut corners for too long to rebuild their processes and business strategy on the right foundations?

While the regulator and quangos that supervise our industry had been giving out warnings for some time about inappropriate behaviour, as seen by the number of individual and corporate fines doled out in the name of TCF, it strikes me that the crunch may be doing a better job than the regulator ever could to clean up the industry.

Sadly, there will be some collateral damage – good people who get caught up in the aftershocks. Today’s challenge is for those committed mortgage professionals to rebuild our mortgage supply chain without the inherent flaws that have been evident in our economic system.

Forget the retail distribution review. It is already increasingly apparent that lenders will focus their limited resources on those distributors with strong systems and controls in place, and will be monitoring quality of business using attrition and NPW rates to cherrypick the networks and intermediaries they want to work with. If your network or club is not already employing highly visible robust systems and controls around the sales process, you may want to start to look around for a business partner that will still be around in six months time.

The distribution model of the future will be the phoenix that rises from the ashes of this current carnage, offering tighter systems and controls, distribution with clear plans and responsibilities, introduction of quotas and kitemarking, an acceptance of liability for advice is the customer’s right prior to accepting any transaction, accepting liability for advice from the adviser and fewer but longer-term relationships with customers being in evidence.

Working together, we can restore consumer confidence by placing high quality advice at the forefront of everything we do, thereby providing better quality of business for lenders while maintaining our optimism and enthusiasm for addressing clients’ needs.

Gerry O’Brien is chief executive of Home of Choice

Recommended

FOS battle hits Court of Appeal

The Financial Ombudsman Service spent three days in the Court of Appeal last week in a bid to defend its decision-making practices and charging structure.

A shaw thing

Annie Shaw is a freelance financial journalist
To One Aldwych Hotel for an early-morning briefing about Yorkshire Building Society’s e-bond. After PR doyen David Holmes had wiped the dripping egg from our chins as we consumed the fare that the Northerners call “breakfast teacakes”, communications cutie Tanya Jackson was anxious to dispel any myth that the new savings product was an “Eeh bah gum” bond although the not ungenerous interest rates did seem to go against the stereotype of the tightfisted Northerner.

Who pays inheritance tax and how to declare it

By Kim Jarvis, Canada Life In this article we look at which forms personal representatives (PRs) need to complete and who actually pays inheritance tax (IHT).  To recap, under current rules, any part of the estate that falls within the available nil-rate band (NRB), currently £325,000, is taxed at zero. Anything in excess of the NRB […]

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