Whilst brokers are being tempted to get KFIs via lender websites, I'm sure most would rather retain their independence. Brokers are familiar with sourcing systems, using them to place mortgages or for comparisons. And if a client needs their mortgage re-broked it's quicker to key it into a sourcing system once rather than into two lender sites. Also to master the complexities of each website illustration facility will be slow and painful (though some such as BMS and Halifax have excellent systems).
Sourcing systems are doing their best to convince us of their accuracy but I remain unconvinced. Consider exclusives. I doubt lenders will want to supply sourcing systems with the small print. I checked both the main systems last week for a shared exclusive we have. One had the product with an incorrect fee and the other didn't mention it at all.
Also, lenders such as Alliance & Leicester pull rates at 24 hours' notice – can a sourcing system cope with this? Quoting a client a rate which you subsequently find has been pulled is a mistake you should only make once.
To produce a correct KFI, many variables must be taken into account. We, like many brokers, have packaging rights with most lenders so clients pay for valuations based on our fee scale rather than a lender scale. And, like many other brokers, we charge fees for our services so these have to be taken into account. At present we use a customer relationship management package to produce illustrations. This lets us know when a client's fixed rate is expiring or when the penalties finish. Most other sizable brokerages use similar systems.
The system supplier is working hard to ensure that we can be sure that the KFIs it produces are correct.
Yes, the regulatory clock is ticking and decisions must be made now. But there are still questions for both the lenders and the sourcing systems to answer.
The issue of KFIs and particularly their legal accountability is one of the hottest debating topics in the mortgage market. The concern is that advisers will have legal responsibility for a KFI produced by a third party. For lenders the situation is simple in that they will take responsibility only for KFIs generated by their own systems.
The adviser can access a KFI either directly from the lender or through a sourcing system. The first is an option that a number of lenders are offering through their websites. This would require the adviser to go online to numerous lenders' websites to obtain KFIs for a lender's products. Our feedback suggests this is not a process most advisers are willing to undertake.
The alternative is for the adviser to generate a KFI from a mortgage sourcing system. The FSA allows sourcing systems to produce KFIs in that it has stated that intermediaries are able to rely on 'competent' third parties for the production of KFIs. The FSA has created a tolerance regime for KFIs produced through sourcing systems. For systems like Trigold then, the onus is on us to prove that our KFIs are trustworthy and that we are a competent third party.
Producing an accurate KFI is down to accurate data and accurate calculations.
Trigold is implementing a verification process with lenders to ensure that the KFIs produced on our system are accurate. Each lender will receive a free copy of a special version of Trigold through which they preview their data and KFIs prior to the products being activated on our system. Lenders will then verify that the product data has been confirmed. All products listed in the software will show a verification for the reassurance of advisers. This accuracy combined with our sophisticated calculation engine will show advisors that our status as a competent third party is as valid as our KFIs.