AMI Blog

Robert Sinclair
Director of AMI, AIFA and the AFB

Mortgage Business Expo - London

Last week we saw the excitement of yet another Mortgage Business Expo – well MBE formerly known as Mortgage Business Expo – in London.

At the last Expo in Manchester we were at the peak of the dual pricing issue, which caused members great concern as they wanted to not only be seen to be treating their customers fairly by the rules, but complying with the principle.

It was an important lesson for the regulator that they had an broker population so concerned about doing the right thing for their customers.

We believe that we now have an equilibrium that allows brokers to give the advice and service that customers want.

This was to a large degree reinforced by Lesley Titcomb, director of small firms and contact centre and sector leader for retail intermediaries at the Financial Services Authority.

In speaking at the Association of Mortgage Intermediaries theatre, she set out FSA’s expectations.

“Certainly we at the FSA want to see intermediaries continue to play an active role in the mortgage market", she told brokers.

"We expect to see improvements especially on establishing the affordability of mortgages, including gathering better evidence to support the reasons for advice, and doing more to take customers’ existing outgoings into account.

"This is key to demonstrating the affordability of the products you sell. And let me emphasise that in the present market, where lenders are requiring ever-lower loan-to-values, the fact that a customer can offer a 40 or 50 percent deposit does not of itself demonstrate affordability.”

She continued by praising AMI for the publication of its excellent report a couple of months ago called The Credit Crunch One Year On.

"Most interestingly for me, it looked at how mortgage intermediaries can adapt to the new environment," she told brokers.

"My message is to make sure you have the basics right before you expand into new areas. It is obviously a difficult market and intermediaries will be looking for ways of diversifying in order to survive the crunch.”

In responding to the messages from FSA, I set out our view about why customers keep coming to intermediaries for advice.

They are voting with their feet to take advice from the intermediary community. It may be a smaller market but we are keeping our share of it. Customers still need advice across the full range of mortgages on offer.

And help in understanding that being able to afford the first month’s repayment is not as important as being able to pay the mortgage over the longer term, especially given these difficult economic times!

We have seen AMI at the heart of the public policy debates. AMI was the first body to publish its solutions to the credit crunch.

We have been relentlessly lobbying for effective solutions around Westminster, Whitehall and Canary Wharf. The politicians from all parties have listened to what we have to say.

The Treasury, Bank of England and the Department for Business Enterprise and Regulatory Reform have been open to our advice. Sir James Crosby wanted to hear what we had to say.

The FSA continues to want to listen to our views of the market and the issues impacting our member firms.

With the initiatives to keep the Banks afloat, that are now running their course, we hope that the capital injections now being undertaken will feed their way through to better inter-bank markets in 2009.

But remedies such as the Special Liquidity Scheme are still only open to deposit taking institutions and need to be extended to allow some of the better non-conforming lenders access to funding.

This is required if the government is to help buy-to-let landlords, self-employed plumbers and those consumers who have a damaged credit record through the odd missed credit card payment, the ability to access funds and avoid unnecessarily increased costs - or at worst repossession.

Being a member of AMI does appear to make it less likely you will get unwelcome attention from the FSA.

If you follow our newsletters, newsflashes and good practice notes, you are more likely to be doing the right things and less likely to be falling foul of the regulator.

We would like the regulator to recognise this by giving AMI members a regulatory dividend and indeed believe that AMI membership should lead to reduced FSA fees payable.

They are good corporate citizens who are prepared to invest in the right things to be a better business and should get a freeze or reduction in their regulatory fees, as a result.

In the last month we have run a series of Business Diversification workshops around the country and in February 2009 we are planning a series of sales skills courses.

There has never been a more important time to be a member of the trade body that's fighting your corner. Together we will stand united and better able to weather these stormy seas.