Justine Tomlinson is marketing director of Mortgage Next
In November, the flaws which existed with mortgage regulation were well and truly exposed. The trade press has been full of problem stories: brokers unable to obtain registration numbers; incorrect FSA website data; lenders whose systems were not ready by the October 31 deadline and problematic KFIs.
In hindsight, it would have been naïve to expect the transition to a regulated mortgage market to have gone without a hitch. Mortgage regulation is, without doubt, the biggest upheaval the industry has ever experienced and for most mortgage brokers it is the first time they have had to come to terms with the demands of working in a regulated market.
It is almost inevitable, therefore, that we find ourselves in a position where we have to admit that some things could be done better. But that does not imply in any way that mortgage regulation is fundamentally faulted.
However, KFIs are the one significant outstanding issue. They are being produced in a myriad of different ways and do not always give consumers a basis for easily comparing one mortgage deal with another. There are also continuing concerns about the accuracy of non-verified data being used by sourcing systems. I think it makes sense for the FSA to take a look at those parts of the regulatory process that are not working as well as they could be.
It makes perfect sense to re-evaluate regulation within a few months of its introduction to iron out any issues. If it were a business introducing new administrative or manufacturing procedures, this type of operational review would be taken for granted so why should regulation be any different? If it ain’t bust, then let’s not try to fix it. But if a bit of tweaking can make it run that much more smoothly, well then go ahead, get the toolbox out.
Peter Beaumont is sales and marketing director of Mortgages PLC
At the time of writing this piece, we were just over one month into a regulated mortgage market, which is not long by any standards. Most companies have spent the past 18 months preparing for regulation, with the level of manpower and expenditure increasing exponentially as we approached October 31.
Whichever way you look at it, preparing for and implementing mortgage regulation has been a major undertaking for everyone involved in the industry. There are some issues to be sorted out and I agree KFIs are among them. Some lenders’ pre-sale KFIs stretch to 13 pages – a lot of information for consumers to assimilate. KFIs need to be short and to-the-point if they are to be a useful tool for consumers.
But there is always a danger that we start to meddle with issues such as KFIs before we really understand the full nature of the problem. Lenders are continuing to tweak their KFIs and sourcing systems understand the importance of KFIs to their future prosperity.
If the FSA revises its rules relating to KFIs in the near future, we could find ourselves in a bigger mess than we started with. I am not saying that KFIs should not be reviewed eventually, I simply believe that now is not the time to instigate a major review of such a fundamentally important part of the new regulation. In a year’s time, we’ll be in a far better position to review objectively the pros and cons of the rules relating to KFIs.
One problem with my sensible approach is that brokers might have concerns the FSA is just waiting to pounce on the first adviser to issue a KFI outside the published tolerances. Let us hope that is not the case. If the mortgage lending industry is to adopt a common sense approach, then the FSA should do likewise.