It was back in May 2009 that the first consultation was published, in the depths of the downturn of the market. At that time, the far-reaching proposals contained in the consultation were regarded by many as an exercise in shutting the stable door long after the horse had bolted.
But from the outset, the FSA and then the FCA have played reasonably fair with the industry. They said they would consult, and they certainly did. They said they would not implement changes until the market was recovering, and they have held to that, too. So here we now are, with a market changed through a combination of direct regulatory requirements and through actions already taken by lenders over the last few years once they saw which way the wind was blowing.
The final changes coming in April will not be implemented as a ‘big bang’ like M-Day was, back in 2004. In fact, from a mortgage broker perspective, most of the changes have already come in as lenders have made adjustments to their lending criteria and case submission practices over the last couple of years. In the next three months we will see the final changes being implemented by lenders, and some modifications to online processes. But in reality, a number of lenders and many brokers probably already regard themselves as ‘MMR ready’.
The major change that MMR brings in is the requirement for all sales to be undertaken on an ‘advised’ basis, apart from a few exceptions. This has been a big push for lenders, who have been faced with getting scores of advisers qualified and trained to give mortgage advice, and implementing suitable supervision and monitoring schemes.
However, advised sales are what mortgage brokers have always been doing, hence there should be little for intermediaries to alter in the way they do business.
It is unlikely that the opt-out to a non-advised sale – because a customer is high net-worth or a mortgage professional, two of the main exclusions – will be used much. After all, people go to intermediaries for advice in the first place, and having a lot of money does not mean that you necessarily know your way around the highly competitive mortgage market. Most broker firms are deciding not to do any non-advised business, and many lenders are not gearing up to accept non-advised cases from intermediaries.
In making this change to all advised sales, the FSA and now the FCA have made it clear that they believe advice is very important for a mortgage transaction. Advice is front and centre and, as such, I believe that the sector of the market that has always done business this way will win out. That is the professional mortgage intermediary sector, whose seller numbers have dropped from over 30,000 in 2007 to perhaps 9000 now. Those who are left in the industry and who have come through the last six tough years are, by and large, very capable, professional mortgage advisers who will be well-positioned to make the most of this recovering market.