While none of us looks forward to increasing levels of regulation – and the accompanying paperwork – we cannot argue against the philosophy behind the Financial Services Authority's regulation of the mortgage market: to create a clear, orderly and efficient marketplace for mortgage products and to improve public understanding of that market.
As Ruth Kelly, financial secretary to the Treasury, announced in October 2002: “Regulation will ensure that a high standard of advice is available across the board to a large number of people, including in excess of one million people who take out mortgages every year.”
At The Hanley we see the introduction of the FSA regulation on October 31 not as a threat but an opportunity – a chance to reinforce our reputation for professionalism and transparency and in so doing win new customers and recruit the highest calibre staff.
Granted, we're not starting from cold. We like to think that our society's 150-year history of fair dealing gives a firm basis for the implementation of the FSA's regulations. The consistent quality of our service has earned us the trust of generations of satisfied mortgage customers.
Maintaining the competence of staff will be vital to meeting the requirements of the new regime and at The Hanley we are enthusiastic about investing in the training and competence of our people.
The launch of our mortgage brokerage two years ago – an ambitious move for a small society – saw The Hanley invest in a highly organised and trained team of mortgage advisers. The brokerage is proving to be effective and our mortgage advisers have set the benchmark for professionalism within the society.
An important appointment in recent months has been that of a training and competence supervisor. The introduction of this staff member specifically in response to the needs of the upcoming regulatory regime means that we now have a person who has the responsibility to develop and implement a training and competence strategy principally for our mortgage advisers and our mortgage administrative staff. But this commitment is not limited to mortgage staff and we are seeking to help our people across the business develop their skills and ensure they are properly qualified to do their jobs.
Hand in hand with training goes detailed monitoring of standards. Our risk-based monitoring programme involves a bi-monthly review with each adviser, continuous file checking and a review of key performance indicator information each month. This programme delivers regularly updated information to senior managers.
A further move has been the introduction of a mystery shopper programme which is producing valuable information on the performance of our staff. This has confirmed the professionalism of the mortgage team.
While the emphasis at this stage is naturally being placed on customer-facing mortgage staff we are also communicating with all staff to ensure they are kept fully informed of the implications of the impending legislation and how it will affect their responsibilities.
The impact of FSA regulation on advertising and marketing activities is another important consideration for Hanley. While the rules might mean a change in emphasis for mortgage advertising – and perhaps a typographical challenge — we are confident that our inhouse compliance procedures will ensure that our advertising copy will not only be legal but that it will also give potential customers a clear and accurate view of our products.
In summary, the advent of FSA regulation is an issue we are taking seriously at The Hanley and one into which we are putting considerable resources. But for us this is not simply an issue of compliance, it is an opportunity to reaffirm our professionalism and the integrity of our mortgage business.
A View from the floor
Jeremy del Strother, divisional director at Nationwide, says that most young people still plan to own their own homes A survey commissioned by Nationwide on attitudes to home-ownership shows confidence among aspiring homeowners still high despite tough market conditions. With average house prices now around £145,000, nearly three-quarters of people who are renting from a private landlord or living with their parents plan to buy their own homes.
Potential first-time buyers are going to new lengths in order to get a start in the market. About one in four (23%) would consider taking a second job in order to be able to buy a property. Nearly a fifth (16%) say that they would consider buying with friends, and one in seven (14%) would try to borrow the deposit from their family.
The research, conducted by TNS, reveals that young people have not given up on the idea of owning their own homes. More than a third (38%) of those questioned said they think that they will be able to buy their own home within the next two years.
Affordability for first-time buyers is becoming an issue because salary increases are not keeping pace with rising property prices. Young borrowers should not over-stretch themselves in the rush to buy.
Our research shows that people who aspire to buy their own homes realise that the market is not getting any easier. About two-fifths (42%) expect prices to keep rising over the next two to three years.
Careful financial planning can go some way to alleviate the problems that first-time buyers are facing. There is no quick-fix solution to buying your first home but ensuring you have cleared as much personal debt as possible before applying for a mortgage will ensure that you are in a healthier position financially. Those wishing to buy must seek proper legal advice before going ahead.
Whatever the case, all potential homeowners must shop around for long-term value.