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CV: In 1990 Mr Cummings joined Mercer Management Consulting as a consultant. In 1993 he joined PPP healthcare as marketing manger and was later promoted to head of marketing. In 1998 he joined PwC as a senior consultant and in 1999 he joined Sun Bank (later Mortgage Works) as marketing director. Mr Cummings formed the Association of Mortgage Intermediaries in 2003 as a director and in 2005 he became director general of Ami and the Association of IFAs.

MA: How did you move into your current role with Ami?

CC: I was with Sun Bank, which was bought by Portman Building Society. Like some of the other directors of the bank I was basically told the Portman acquisition was a long-term strategy move and there was a great future for those involved, but perhaps not for one or two. After a year we parted our ways, very amicably, and this was a year and a bit before mortgage regulation came in.

I had written some articles and given some speeches on the need for mortgage intermediaries to get themselves organised because regulation was coming and if they did not get themselves organised they would get rolled over by the regulator. We had the Council of Mortgage Lenders, Intermediary Mortgage Lenders Association, British Bankers Association, Building Societies Association, more trade bodies than you can shake a stick at, and it is not Ami policy to shake sticks at trade bodies but advisers did not have one. I wanted to join an intermediary firm when I left Portman, I thought what I would do was run an intermediary firm. I had a few interviews with large intermediary firms and then a friend, though not so much of a friend these days, mentioned why did I not go for the Ami job. I thought I have got a commercial background, I am not really a trade body person but I then bumped into a chap called Paul Smee who was my predecessor as director general of the Association of IFAs.

MA: How did your involvement with Ami emerge from that conversation?

CC: Tony Ward was running an organisation called First Active - not the First Active we have now. He was chairman of Imla and was doing his best to get Imla to support this mortgage intermediary trade body. It was kind of a confluence of events. I said I would come for a chat about the job and it sounded so interesting. I have always been interested in politics and I have always been interested in public policy. I thought this could be a really interesting job to do for about a year because in a year's time regulation will be in and it will be old hat. Then I can go and get a proper job again. That was five years ago.

MA: How do you feel the role has changed in the five years you have been doing the job?

CC: In Ami's early days most mortgage intermediaries had not really thought about what regulation could mean for them. Basically most mortgage intermediary firms are cottage industries. There is not a great deal of networking between intermediary firms, which often surprises people. There is lots of interaction with lenders but they are not great at linking up between themselves. Ami was set up to focus entirely on the preparation of FSA regulation of the market.

The Mortgage Code Compliance Board, which was the previous voluntary regulator, was bowing out, FSA regulation was coming in on 31 October and Ami's job was all about saying to mortgage intermediaries what are you going to do? You have got various choices in front of you - you can leave the industry and do something else or prepare for regulation. If you are going to be regulated you can become directly authorised or become an appointed representative, so how are you going to prepare yourself for the future? Then I went round and saw loads of intermediary firms. I said "Hello, I am from your local friendly neighbourhood trade body. I am a lobbyist and I am going to represent you with the FSA and parliament." Everyone said that was really boring, they were not going to join, why do we want that as we have never had one before so why do we need one now? I thought that was a really good point, what is the tangible benefit for members because this lobbying stuff is a bit esoteric. I thought what we should be doing is helping members prepare for regulation, so we produced a series of good practice notes. It was things like 21 things to ask a network because everyone was setting up networks at the time, everybody was promising the world and I thought you need to do due diligence to sort the wheat from the chaff and so we wrote a collection of good practice notes, how to choose a network, how to become directly authorised, obtain professional indemnity insurance and how to prepare for an FSA visit. People said that is really useful.

MA: What was your hope for the membership of Ami?

CC: It has always been my motivation that most of the people who are members are small business people and therefore they have a choice. They can give me membership fees or they can take the money home with them. So we have a very simple value equation. It typically costs £16 a month to belong to Ami and I always thought if we charged people £16 a month but we gave them £20 a month in value that is a fair deal. So every month I look at what we have delivered to firms this month and if I would pay £20 a month from my own money to get that information then we have done well. If I think we have delivered £16 of value I am a bit twitchy and if I ever thought we were delivering £10 of value I then I would want something be done about it straight away.

MA: So is the role of Ami still very much regulation focused?

CC: It is, although the canvas on which we paint has extended. We are focused on FSA regulation but it quickly became apparent that actually there is more than the FSA. You have to worry about the Financial Ombudsman Service and the Financial Services Compensation Scheme. You quickly realise the role of the Treasury in terms of setting public policy and the various government departments that are intertwined with that, such as the department of local communities, the housing ministry and now the role that is taking place advising the European Commission on things like mortgage policy housing policy. So the spectrum of Ami's contacts has increased massively in the last five years as well as the role Ami plays.

MA: How has Ami made sure its voice is heard among decision makers?

CC: We are regularly consulted by politicians of all shades such as the Conservatives, Liberal Democrats and Labour. We are of interest to the Office of Fair Trading as well as the FSA. I spend a lot of my time in Brussels because that is where 70 per cent of regulatory proposals come from. So while the heart of the job is regulation the scope of regulation has increased substantially. There are other things that Ami does as well, We are heavily involved in helping our members recognise their training needs so putting them in touch with trainers, running training events and seminars. We are also focused on helping our members run better businesses so as well as doing regulatory fact sheets we also do things like how to buy leads if you are extending your business and how to buy compliant IT systems.

MA: How does getting mortgage advisers ready for regulation compare with preparing them for treating customers fairly and principles-based regulation?

CC: Like in any small business-dominated industry it is at times of need that it is easier to galvanise action. Rather like when professional qualifications became mandatory a lot of intermediaries left it to the eleventh hour and then all qualified. They were all capable of doing it, it was just business pressures. It is the same with mortgage regulation.

It was a point of need and lots of people really hung on to the last possible minute to make their minds up. We had an interesting time in the mortgage market in the first couple of years of regulation because while the FSA has increased the standards against which it was to monitor firms and measure satisfactory performance it was not very good at getting that message across. So a lot of the smaller mortgage intermediaries felt mortgage regulation has arrived, nothing much has happened and sadly the regulatory compliance standards started to dip. So at a time when the FSA was increasing what it was expecting, firms were actually decreasing their preparedness.

So in our first couple of years reports coming out of the FSA were very good but then in the third year problems really started to occur with the FSA thinking, hang on there is something not working? What is it that is failing? So Ami had to step in and put out a lot more good practice notes and encourage the industry to re-engage with regulation. The FSA then created the small business division, sharpened up communications and got a lot better about telling firms what was expected and that helped pick up the pace again. Treating customers fairly has been a particularly difficult thing for mortgage intermediaries because the heart of an intermediary's business is treating customers fairly because most work comes through word of mouth and personal recommendation. It is not as if we have multi-million pounds of brand advertising spend to rely on so it is all down to the service you deliver to your clients and therefore the recommendations they give. It is a particularly hard message to for intermediaries to get this thing called TCF. Culturally it is embedded in their DNA.

MA: Have you had any feedback from the FSA?

CC: We have. We have monitored on a monthly basis since November how firms think they have been getting on. Every month we do research with about 600 mortgage intermediary firms so we have a pretty good idea of how well firms have embedded TCF and we are in the high nineties, mid to high nineties month in month out so we have a lot of confidence in that. We have also seen some information coming back from the FSA for mortgage intermediaries on TCF and that looks good so far. We have not had the official report. That is going to be out late May, early June, but certainly we are a lot more optimistic about how prepared mortgage intermediary firms are than we were this time last year. I think firms have recognised what we have to do.

MA: At the Abbey for Intermediaries key accounts conference you said advisers feel the pain first and for the longest. Do you feel advisers are suffering more than lenders at the moment? Some lenders appear to be by-passing intermediaries with their distribution practices. Is this something Ami are looking at?

CC: I have been talking to lenders around the country about it for the last few weeks now and I had a meeting with a lender this morning on this very subject. It is more with sorrow than with anger we look at the market and say it is disappointing that lenders are not now remembering the people who made them successful in the last few years. I am deeply disappointed when I see lenders putting forward better deals through their branch network than through the intermediary community. It is short-sighted.

There are some good strategic business relationship reasons why lenders should be favouring intermediaries and there are some good compliance and risk mitigation reasons why lenders should be favouring intermediaries. I would encourage all lenders to put the needs of their strategic business partners first. There is a role for branches I am sure and they are called saving shops. It seems at a time when lenders are running short of cash they should be using their branches to encourage a good savings habit rather than looking at them as a way of distributing mass mortgages. But Lenders have got a role to play in helping intermediaries. There are some unintended consequences of lenders not supporting the full intermediary community.

MA: What will be the consequences for lenders that fail to support intermediaries?

CC: Casting my mind back to when I was a lender if you have a regional concentration of mortgage business, which you will always get from a branch network, it is only a limited distance that people will drive to get to a branch. The great thing about intermediaries is we can provide national coverage. Ami is doing some work at the moment looking at the value delivered by mortgage advice for individuals because we have always thought and believed very strongly that an individual who gets mortgage advice will be financially better off than somebody who does not.

Looking at FSA statistics that seems to be borne out as well. The FSA produces product sales data on a rolling basis and the business that gets done through branches seems to be high margin business and the business that goes through an intermediary tends to be lower margin business. That says to me intermediaries are better at finding better value products for their customers than perhaps lenders are. We are going through a really interesting phase in the lender-intermediary relationship as the lenders are taking every advantage of market conditions to put margin back in their business.

In a sense who can blame them because they have been complaining for a long time there is no money in mortgage business. If this is a short-term blip we would find ourselves very happy to support that because that means we end up with a structurally robust mortgage market again. If we were to see lenders overpricing products, pulling away from intermediaries’ distribution in favour of their branch network then that creates different competitive pressures which will become very transparent to intermediaries and they have very long memories. I do think we are in a very interesting position with lenders today. We have three types of lenders in the UK we have those who are basically branch-based lenders and the savings they take in they lend out and they are taking time to restore margin to their products and they are doing quite well actually.

We have then got the middle tier, the new entrant lenders who tend to be wholesale and securitisation backed and to them the market is closed and I think they are having a great deal of pain. We empathise with those people quite considerably. We have a third group of lenders who can access either American funds or European central bank funds and they are having a whale of a time. They have fewer funding issues, they are restoring margins and the market is looking to them to exercise their leadership positions not in a collaborative, cartel like way but in a long-term significant player way. It is at times of market turmoil the larger financial institutions need to step up to the plate and calm the market down.

MA: Some trade bodies have said they are anticipating a drop in membership?

CC: There is no doubt we will go through a period of consolidation. How it works is an interesting question. People say to me with this consolidation will networks get bigger? Networks will get bigger because networks have centralised buying power and because of their compliance muscles they will be able to convince the larger lenders that actually there is a limited capacity to go round and it will be the larger entities that get access to it.

If you are a smaller entity then you will not stay in business, so you will join a larger entity to stay in business. I can see certain consolidation occurring for a period. The lesson history teaches me is the market consolidates and then it fragments again, either as the market recovers or they get dissatisfied with the network. Other people say does this mean the end of intermediaries running a business from their back bedroom. I do not think it will. A lot of these have quite a decent living on three or four mortgages a week because they have no overheads. All they need to do is restrain their expenditure so they can cope on one or two mortgages a week.

The market is very fluid and robust because we have a lot of members who do not have huge infrastructures to finance. So I am convinced there will will be a continuing role for small mortgage intermediaries. The dangerous part is that middle ground of firms who have had no experience of managing a firm through bad times, thought the good times would always continue so therefore have invested heavily in overheads and have got into expensive ways. They are the ones who I think have felt the pain earliest. The packaging community is a classic case in point. Those firms who did not make tough decisions early enough face a precarious future. They will not all go out of business but there will be fewer of them. But the market is cyclical so we will see more people come back in.

MA: You recently said Ami needs to step up to the plate to support those advisers that have not managed a business through hard times. How will you achieve this?

CC: We are doing a number of things. We are putting out good practice notes about how do you move into other avenues. Equity release for instance is becoming immensely popular all of a sudden and that is understandable but also a little worrying because there is nothing more the FSA worries about more than a spike in business. When the FSA sees a spike in business it has a thematic review. We have just done some research asking members what avenues they will be looking into - fee charging, some interest in second charge loans but equity release and commercial mortgages, there is still lots of interest in those and protection has galloped pace. People are more attuned to the overall environment and talking to them about protection makes a lot more sense. You have a much more willing participant because they can see that people's jobs are less secure.

MA: You mentioned fee charging do you think we will see more advisers looking to charge a fee?

CC: There has been a trend since the onset of regulation with more and more intermediary firms charging a fee. I am all in favour of that. I think mortgage intermediaries deliver a professional service and that should be paid for in an adequate way. Commission levels outside of sub-prime and buy-to-let have never been terribly high and I would like to see them much higher but I think consumers are less resistant to paying fees for mortgage advice than perhaps other parts of financial planning.

As long as the fees are economically viable and at a reasonable level then fee charging has got to be encouraged. It is a very risky business to give advice these days and if you are not getting a decent premium on that then you are not running a good business. The professional indemnity market will definitely go through a shake up as well so it will be more expensive to buy personal indemnity insurance and could well be much harder to get hold of so again you will need to reflect those costs in what you are charging otherwise any businesses profit margin will suffer.

MA: What is the biggest challenge you have ever faced?

CC: The biggest challenge Ami had in its early days was convincing enough people that we were not a commercial organisation because so many people were looking for the catch. I had some really bizarre conversations when I started Ami. People thought we were trying to set up a mortgage club or that we would sell our database. It took people a long time to recognise that I actually wanted to run a trade body and not a commercial entity.

Looking back it is easy to forget how big these challenges were and that was definitely the biggest one; representing yourself as something different. But then they realised how uncommercial I was and then they got it. But of all the challenges we have faced the credit crunch outpaces it all. This is my third banking crisis now but I do not remember others feeling quite like this. I am just about old enough to remember the last housing crash. I came into the industry right at the end of it and I know how bad that was but I do see this as being immensely tough and as an industry I think we have failed to engage politicians soon enough because we have not had a united front and as anyone who deals with the Treasury will say if you do not have a united front then you do not get taken seriously. I would like to think the industry could rally round to come up with a united solution because if we do not we will have ourselves to blame for the credit crunch in the UK. It will last longer than it needs to and that will be terrible for everyone.