Lenders must keep it simple with KFIs

A recent census by the Association of Mortgage Intermediaries shows the issues brokers face. There are not too many surprises but the findings are consistent. A year on from regulation brokers still face challenges on a daily basis.

But I am surprised 24% say they are experiencing difficulties in obtaining Key Facts Illustrations from lenders. I remember that in the summer of 2004 lenders were racing to get their KFIs to market and the trade press was awash with stories of lenders releasing these documents. Why is it that obtaining a KFI is still such a challenge?

The fact is that lenders have complicated something that should be straightforward. For example, brokers are challenged by the plethora of places a KFI can reside – on a lender’s website plus a variety of sourcing systems.

It’s a little easier for those who have chosen the appointed representative approach. Principals will have invested extensively in compliance and sourcing systems delivering KFIs and IDDs, taking the adviser through the process. In other words, the adviser has a point of commonality for the sourcing and selling of products.

The situation for those directly authorised is not so clear but some will have opted to deal with packagers that offer a similar portal to those available to ARs. And DA brokers are not subject to lending panels so they can search the entire market.

The problem is that with the process of obtaining a KFI so uncoordinated it’s no wonder 24% report problems. Lenders should ensure their products are available on as many recognised sourcing systems as possible.

As back-up the broker should be able to access the lender’s website to obtain the KFI. It’s fundamental – no KFI, no sale. If the intermediary can’t access product A, product B will be sold with caveats that the substitute product suits the client’s needs.

Did the 24% that reported problems sell substitute products? If that is the case, some lenders are losing significant amounts of business, not to mention stretching the loyalty of supporting intermediaries. In the absence of more coordination – and that probably means some form of centralisation – lenders must take a 360 degree approach.

Some 12 months into regulation, so many intermediaries should not be experiencing difficulties with something that should be so simple. Memo to lenders: let’s make it an new year’s resolution that all intermediaries can obtain the KFIs they require.