In recent years, the mortgage market has made huge strides in moving from paper to online applications. so much so, that lenders such as Halifax and Alliance & Leicester have been confident enough to insist that all intermediary applications should be submitted this way in future.
Individual provider extranets account for many applications but an important role is played by the mortgage portals.
The Mortgage Trading Exchange (MTE) – owned jointly by Halifax Bank Of Scotland, Nationwide, Royal Bank of Scotland, Barclays, Northern Rock and Alliance & Leicester – has recently announced it is transacting applications at a rate of £10bn a year, with its sister company, Mortgage Brain, providing sourcing software to more than 22,000 advisers.
Trigold, whose shareholders include Abbey and Egg, has fewer adviser users, 17,500, although it claims a similar level of electronic submissions via its Electronic Trading Centre (ETC).
One big problem with the current portal arrangements is that Abbey products cannot be submitted over the MTE platform and the majority of products from MTE/MBL shareholders are not available via Trigold. From an advisers’ perspective, this is a frustration and illogical.
With the Santander takeover of Abbey, I hoped that the major lenders would recognise it was in everyone’s interest – lenders, advisers and above all, consumers – to make all lenders’ products available over both the dominant mortgage platforms.
Now a third option, the Mortgage Portal, has emerged. This service is initially targeting the impaired-credit market rather than applications via high-street lenders, although if it succeeds, it is not going to be atrractive from the adviser’s perspective to use one system to service applications from people with good credit history and another for those who have had problems.
Mortgage Portal is advocating that lenders should adopt industry standards, an approach used in the designated investment market, to reduce the need for individual interfaces and integrations between product providers and lenders. It should be recognised that the process of developing standards and getting industry-wide adoption can be a long and time-consuming one.
The so-called standards that seem to be proposed here appear to be the same as a set of standards originally proposed by the developers of the Mortgage Portal three months ago.
This raises the question: when is a standard not a standard? When it is your interface that you want everyone else to adopt. If we follow this line, the MTE and ETC could equally claim to have their own “standards”.
There is a suggestion that the Mides standards are being “merged” with the Origo life and pension standards.
It is not clear exactly what is meant by such a merger but there are obvious questions that have to be asked about governance of Origo standards.
As an industry sponsored by the life and pension offices, the big life companies have the final say on what goes on at Origo. If the merger means that the standards are being handed over to Origo I would be surprised if the likes of Halifax, Nationwide, Royal Bank of Scotland and Barclays would be happy to have data standards that could be critical to their ability to trade controlled by an organisation that is dominated by the likes of Norwich Union, Standard Life, Aegon and Prudential.
In the past, Origo has developed standards for the collective investment industry. However, the only major fund manager that has adopted them is Skandia, itself an Origo sponsor.
When the Mides standards were first mooted, I suggested it was time for a standards body covering all areas of financial services. This would need a fresh approach with a clean sheet of paper. The existing options carry too much baggage.
As for the use of standards, if these can be true industry standards adopted by all the platforms and with an open governance structure that fully represents the needs of all sectors of the industry, they may have a lot to offer.
The first step would be to convince the Mortgage Trading Exchange and Trigold and their shareholders to adopt standards.
Anything less is likely to inhibit the speed of e-commerce in the mortgage industry and runs the risk of putting it into reverse because of the time taken to agree and implement standards.
If it is possible for the Mortgage Portal to create innovation within the market and to provide advisers and their clients with greater flexibility, this will be a good thing.
At the same time it will be important to balance the extra work that is created by the need to support another industry platform.
Delivering such a proposition will be a long-term project and require deep pockets, but at the very least the Mortgage Portal may galvanise those in the mortgage platform market to address the needs of both the adviser and impaired-credit communities. If it can do more then all the better.
More information on the Mortgage Portal can be obtained on the internet at www.themortgageportal.co.uk.