Obtaining Key Facts Illustrations from lenders is the biggest problem intermediaries face since regulation, say those taking part in the Association of Mortgage Intermediaries September mortgage intermediary census.
Firms responding to the census also highlighted the cost of compliance as a direct threat to business.
Previous census results have shown that the majority of intermediaries welcomed mortgage regulation as a means of increasing standards, but key issues have yet to be resolved. Of the challenges arising from mortgage regulation, 24% of respondents say obtaining KFIs from lenders has been the most troublesome issue for their firm.
Record keeping and regulatory reporting were also identified as the most difficult aspects of regulation. Obtaining KFIs from sourcing systems and increased training and competence requirements both rated high in terms of difficulty.
On customer service, the census shows intermediaries are split in their views on the merits of regulation. While 41% say standards of customer service and advice have improved as a result of regulation, 45% say regulation has not made any difference and 13% are undecided.
Intermediaries also expressed a broad range of views on the greatest concerns facing their businesses. Over 50% identified the costs of compliance as a direct threat, while 26% were most concerned by a possible slowdown in the mortgage market.
Reduced lender procuration fees troubled 13%, while falling house prices worried 3%, client retention concerned 2%, and interest rates unsettled 1%.
Intermediaries also acknowledged opportunities for their businesses over the next 12 months. Just over a quarter consider the introduction of fee-charging for their services as a major opportunity, with 25% identifying expansion into commercial mortgages as another. 19% identified expanding their protection offering as an opportunity, with 14% saying the same for personal loans.
Interestingly, just 1% expressed their intention to expand into the lifetime mortgage market. This seems to confirm AMIs view that intermediaries must address the increased training and competence, PII, and compliance requirements before offering advice in this area.
Ben Stafford, head of policy at AMI, says: “These are interesting indicators of the key day-to-day concerns of firms almost one year into regulation. It is clear that the industry needs to adopt a more coordinated approach to helping brokers produce KFIs for customers.
“Equally, firms communications with the FSA itself need to be made easier. Many have been confused by certain information requirements in their first RMAR return, and steps taken to address this by the FSA will be welcomed.
“It is vital that firms realise that comprehensive record keeping is in their own interests. Not only is it a regulatory requirement, firms are opening themselves up to complaints if they cannot clearly evidence the suitability of advice given to clients months and years after the event.”