The talk before M-Day of one of the consequences of compulsory regulation was there would be far fewer packagers. Two and a half years later the opposite is true – the number of packagers has increased. And while it is nice to see the doomsayers could get their predictions so wrong, questions need to be asked about whether all packagers add value to the mortgage process and whether there should be a move towards standardising service levels. This would be a means of providing intermediaries with meaningful information about the competence of packagers looking to do business with them and also of giving lenders knowledge of their ability to undertake the outsourced functions in a professional and compliant manner.
At the Regulatory Alliance of Mortgage Packagers we have endeavoured to provide our members with a working framework in conjunction with their compliance teams that provides clear evidence not only of the competence of their working practices but adherence to the compliance infrastructure that underpins the selling practices of both lenders and intermediaries.
The concern in the market now is whether all packagers are able to continue to offer value to both their lender partners and intermediary customers for the future. Unless there are quantifiable and comprehensive standards that ensure packaging does not fall short then the value of packaging will be under scrutiny and the question of viability will arise as lenders examine other ways of marketing and administering their products.
With many smaller packagers unable to command exclusive products and unable to offer a full whole of market menu of products and services together with the challenges of investment in technology, it is a wonder that many are able to continue to operate successfully. The rise in the number of packagers entering ‘satellite’ arrangements with larger competitors in order to demonstrate a competitive edge is another area where there are no demonstrable standards applied to the satellite or its host.
The problem for the industry is how the commercial relationship between satellite and host packager does not compromise the necessity for the host to take responsibility for the service standards and work practices of the satellite and see that the intermediary, the client and the lender to whom it is responsible are all receiving the best support and service.
At RAMP, we have built a reputation for taking regulation seriously and that preparation and hard work means all our members along with the satellites are able to demonstrate their service and work practice is fully compatible with the requirements of treating customers fairly and also meets the regulatory requirements of our lenders.
The wider aspect of service outside the merely regulatory does need to be addressed.
While the Financial Services Authority continues to examine the non-conforming market, it would be good to see the packaging market had its own house in order and the move to a series of standards would be a step in the right direction.