Most brokers disillusioned with regulation

Most brokers are disillusioned with mortgage regulation and many are cautious about using some of the newer lenders, says Henry Samuels Marketing Services.

These findings come from the Mortgage Intermediaries – One Year After Regulation report, based on research conducted among intermediaries about their experiences since Mortgage Day.

The report found that most intermediaries are not happy with the promised benefits of mortgage regulation with 43% saying that it has done nothing more than create extra work and paperwork.

It also highlights negative expectations prior to regulation when 28% believed it would not benefit them in any way. Some 21% say that this is the outcome of regulation for them. Only 2% say regulation has benefited the customer and only 1% of intermediaries say it has simplified the process.

Henry Samuels, chief executive of HSMS, says: “While it was expected that a significant proportion of mortgage intermediaries would be critical of regulatory restrictions, rarely has any research revealed such damning criticism. The research indicates a clear need for review.”

While initial intermediary expectations were unsurprisingly cynical, HSMS says their experience after one year indicates that any benefits of regulation are far out-weighed by unsatisfactory experiences, suggesting that regulatory rules should be reviewed.

Samuels says: “Users of this research have the opportunity to approach the government and illustrate the strengths and weaknesses of regulation to ensure appropriate action is taken to create a regime that is both manageable and relevant to consumers, product providers and intermediaries. Clearly the current model does not meet these requirements as there is widespread criticism.”

The report also indicates that new lenders such as GMAC-RFC and Mortgage Express are losing out to the traditional players like Abbey and Halifax.

Samuels adds: “The regulatory changes we have seen have encouraged caution among brokers in their choice of lender with them often pointing clients toward better known lenders even though in some instances they might not be entirely satisfied with the recommended products”

Of those asked, 39% mainly use Abbey with only 5% saying that they mainly use Mortgage Express. And 32% mainly use Halifax despite its product satisfaction score of 1.19 being lower than both GMAC-RFC and Mortgage Express at 1.29 and 1.31 respectively.

Samuels says: “Clearly the regulated mortgage market through intermediaries has yet to see many more changes.”