With questions being asked of lenders about whether they are on track to implement the Mortgage Market Review, there appears to be plenty of similarities between the recent London Olympics and the new regulatory era.
The medalling has stopped and there are no more false starts – we now have a clear set of rules from the regulator.
For example, the FSA has finished running round the country shedding light on the impact of the new regulations on advisers with their MMR torch.
While there’s no clock in Trafalgar Square we have started to count down the days to April 2014.
There’s also bound to be a legacy committee at the FSA who do not want to be remembered solely for ‘not closing the mortgage stable door after the horse has bolted’ – or is that more of a concern for the FSA concerned about food?
Like the London Olympics, the impact of the MMR is to create a fit and financially healthy UK population not overburdened by debt obligations that are too fat to carry. Sport England claimed that the number of people playing sport at least once a week grew by 750,000 in England last year as a result of London 2012. The aim of MMR 2014 must be to reach a similar target in terms of people getting the right advice in achieving their borrowing needs.
It will be interesting to see which teams enter the MMR 2014 arena and how many advisers will be proudly marching behind their high street branded flags. We know that there will be challenges for branch staff as they take part in training to get over the sales process hurdles and achieve the minimum qualification standards. With the majority of Intermediaries already qualified, there has never been a better time to communicate their advantage having already got their ticket to the games next year.
MMR 2014 should create a level playing field in terms of running through the application.
However Banks still have the better equipment for understanding affordability and assessing whether to lend.
What Intermediaries must do is ensure they don’t put their customer on the starting line with a high expectation that they can complete the course.
Lenders are looking at conversion rates of applications as a quality measure and intermediaries can avoid being for the high jump when they pass the application baton to the lender only to find it quickly gets dropped. Advisers must discuss with their clients that the cheapest rate is not always the most suitable – sometimes the bar is set higher for a reason.
Changes to interest-only rules and customer interaction mean that the relationship with clients is a marathon and not a sprint. In the past mortgages have been sold in isolation to complementary needs such as protection and investments. But credible forms of repayment and a long term understanding of the client’s aspirations and financial goals are two of the cornerstones to MMR 2014. Both should deliver a more educated population of homeowners and a sustainable adviser community not solely dependent on the level of money banks have to lend.
So when MMR 2014 finally arrives, advisers must ensure they have a client bank that is fit and ready for the new regulatory landscape. Advice is the new pitch. Anyone who is consolidating debt or raising equity will need a coach who can help them with a plan, a plan that will keep them on track not just now but for many years in the future.