Mortgage Day has dominated the year and the implications Financial Services Authority regulation has had on our industry.
One key (pun intended) issue has been the introduction of the Key Facts Illustration. Never in my memory – apart from the endowment and pensions scandals – has a single issue taken up so many column inches, energy and resources than the KFI. I have a simple piece of advice to draw a line under this matter.
Despite the FSA confirming in a speech at the Council of Mortgage Lenders’ annual conference that it is conducting a review of KFIs, I don’t believe there will be any rule changes. The FSA is not about to change the rules on KFIs or any other issue five weeks into its regime, especially as it has provided assistance in the form of KFI templates on its website.
My simple advice? Lenders, networks and everyone else should use these models to comply with the FSA. To quote Clive Briault, managing director of retail markets at the FSA, “less is more”. The FSA has started to review examples of KFI documents to assess how the rules are being applied in practice.
Briault told delegates last week that the FSA’s initial focus has been on major mortgage lenders. “The layout and clarity of most of these documents is good,” he said. “We welcome the efforts these lenders have made. However, the length of these documents varies dramatically, from over three pages to double figures. Of course, more complex products require greater explanation and therefore a longer KFI. But not all the longer documents apply to complex products. The problem with length is that it discourages consumers from reading the document and tends to obscure the key elements of information in unnecessary detail.”
A few key facts to consider: The KFI was always intended to be a layman’s summary of what the client could expect from their mortgage – not an encyclopaedia of industry jargon to confuse or be so lengthy as to be discarded.
The FSA has offered guidance on KFIs, so take it. Please do not suggest I am oversimplifying the matter as it is my belief some are over-egging the pudding. Remember the K.I.S.S. concept, Keep It Simple Stupid.
Another reason some are going overboard on KFIs is that while it is an important compliance document, the regulator is not the enemy. The FSA is keen to put this baby to bed. It is also keen to be seen as a partner rather than the big bad boss wielding a stick. It’s time for a change of mindset to embrace the FSA – try it and I’ll bet you will be pleasantly surprised.
Stating the obvious, the rise of one has meant the fall of another in the shape of the MCCB. I wish everyone who was employed at the MCCB good fortune.
Correction from last week’s article: The CII annual membership subscription is 60 plus 20 a year for the use of CII MP designation. On renewal of the subscription the designation fee is to be raised to 50.
Let me feel the quality, not the size
I guess it would be folly not to touch on the subject of networks and who are going to be the eventual winners. I use the plural, as there will not be a single winner. We have all heard the saying, big is beautiful, but I do not subscribe to this. You offer brokers an efficient network that has the resources, exclusives, BDMs, back office support with a high conversion ratio of applications to completions and they’ll take it irrespective of size. I feel the same as most brokers, “let me feel the quality – not the size”. Let the best men win.
Which brings me nicely on to the next topic, that of gender. Coming from the school of male chauvinist pigs some would expect me to fight my corner for the long overdue male liberation movement. Without sounding sexist, it’s time for change; let us see more women in our male dominated industry (as long as they don’t take their screaming kids with them to an appointment).
As for the future, I’m sticking with my prediction of some two years ago that there will soon be only half a dozen major players in the network arena. However, the small fry needn’t worry as some will be bought out in the increasing merger rush.