In the run-up to M-Day there was several forests’ worth of coverage of what might happen and what problems could arise from the implementation of FSA regulation on the mortgage industry.In what seems like the blink of an eye, we are already six months down the line from what was predicted to bring problems of cataclysmic proportions to the market. Things move on and the mortgage market remains alive and well despite the “onslaught” of regulation but that is not to say that things have been easy or that the process is perfect. Clearly, the standout of the new regime has been the introduction of the key facts illustration. This is one of the cornerstones of regulation and has had the biggest impact on the mortgage sales process. The KFI’s raison d’etre is to help the consumer in comparing different products from different lenders by standardising the way that a product’s information is broken down. This sounds like an eminently sensible thing to do but, of course, posed huge systems issues for lenders in order to deliver. This is where the big problems arose on M-Day and in the following week,s with advisers unable to generate KFIs at all in some instances. Thankfully, the generation of KFIs has smoothed out somewhat as lenders and sourcing systems have ironed out the niggles in their systems. Having said that, there are still often some delays in getting a KFI up and running following the launch of a product. This can effectively para-lyse the broker who is keen to start recommending a hot product just on the market. A big decision for a broker is where to source the KFI. Sourcing systems are significantly more convenient but their use does put the burden of accuracy squarely on the shoulders of the broker. Sourcing systems such as Mortgage Brain have looked to work with lenders and get them to verify their KFIs, adding weight to the sourcing system proposition. I think we would all like to see the sourcing systems working closely with lend- ers with the Utopian position seeing data shared electronically to minimise the likelihood of error. That is likely to be a very long way off, with some lenders currently not verifying their products and, in fact, choosing to push those looking for KFIs to their online facilities, which can increase the workload of an adviser needing multiple illustrations. Perhaps the biggest area for concern is the presentation and content of many KFIs quite dramatically between lenders, with the number of pages of some KFIs heading into double figures while better examples are half this length. The fear is that these illustrations are not achieving what they were designed to do and are actually giving more complicated information rather than simplifying the buying decision. Inevitably, these overlong illustrations tend to be the ones where the jargon creeps in, compounding the difficulty of navigating through the document. One has to wonder how much people can be expected to learn from an illustration which requires a great deal of concentration and effort to work through properly and, in many cases, will be intimidating to the customer. Obviously, the broker is there to talk their client through it but the fact remains that some KFIs are missing the target of clarity. But let us not be too negative as there is bound to be an element of evolution as time goes on and flaws are exposed. The FSA has been looking at KFIs and its assessment includes length and content. It sent out a letter to lenders saying some KFIs are longer than they need to be. This is an extremely positive step from the regulator. Where there is perhaps cause for complaint from the industry is when seeking clarification from the FSA on how MCOB applies to specific, real-life situations. Frustratingly, the answer tends to be that it is up to the broker to interpret the rules as to how they will apply rather than taking the more positive approach of providing guidance on the specific circumstances. Firms trying to do their best to act compliantly come up against what seems like a brick wall, which is hardly likely to foster a closer working relationship. An increa- sed level of openness would be a big step forward. This is where the Association of Mortgage Intermediaries has been so important in building a relationship with the FSA so it is able to represent the brokers’ voice in a considered and constructive fashion. Another big positive is the rules on financial promotions squaring up an area where there was real scope for less professional companies to emphasise the positives of a product while conveniently not mentioning the more negative aspects. The new rules provide a level playing field and give a more balanced picture of a product. Six months on, it is now a case of policing the market to make sure these rules are adhered to. Some of the more interesting areas will be in the treatment of existing borrowers. These borrowers have already felt the touch of regulation when looking to port their existing deal and top up on a new product. This is a major headache for lender systems and was one area where some lenders were struggling in the early days of regulation. Another interesting area is for those existing borrowers who decide to remain with their lender but want to take advantage of a new product offering rather than sticking on the standard variable rate. Will lenders simply vary their existing contract to take account of the new rate or will they treat as a new contract and issue a KFI, etc? The difference in approach could bring one borrower within the new regulatory regime and leave the other as an unregulated contract – a potential downside if they need to seek redress. There have been a lot of positives and one thing for sure is that regulation is here to stay and has not killed off what remains an extremely innovative and competitive mortgage market.