In the run-up to the CeMAP/MAQ examination deadline of December 31, I will be looking at the four options open to brokers who remain unqualified after that date.
This week we look at Option 1, which is to “Pretend nothing has happened”.
You return to work on January 2, the kettle still works, so does your computer and telephone, and your clients remain alive and well. None of them ask you if you are now qualified – have they even heard of CeMAP?
You continue to provide valuable advice to consumers who generally haven't got a clue.
Various advertisements on TV continue to convince them that this is a complex subject with a labyrinth of products, options and permutations. Going to an experienced (if unqualified) broker for advice and guidance is the sensible thing to do.
They appreciate your help in organising a suitable mortgage for their purposes.
But according to the politically correct people in the industry, this scenario is total fiction, and, in reality, no unqualified broker will continue to provide advice. This could not possibly happen. It's just not allowed, so there's no point in reading the rest of this article.
Jolly good. As no-one is going to read even this far, I can now write what the hell I like, fiction or non-fiction.
I believe that a substantial number of unqualified brokers will continue to provide advice, and carry on in their normal manner, submitting mortgage applications through mortgage clubs, networks and packagers, or, of course, direct to the lender. Are lenders going to ask for a copy of their CeMAP certificate? I wouldn't bet my money on it. I suspect most lenders will turn a blind eye, profess that they are working from the register issued by the MCCB and that their responsibilities only extend to checking that the brokers submitting business are on that list.
If lenders are going to turn a blind eye, setting the standard so to speak, what do you expect from the clubs, networks and packagers?
In general, they are highly unlikely to police the industry and check on the brokers submitting applications. There will be some exceptions, such as my own company Network Data, which will refuse to deal with unqualified members unless they are being supervised.
What are qualified brokers going to make of all this? They could well feel a bit miffed, having taken the time and trouble to pass their exams, they then find that unqualified brokers can carry on regardless. They are likely to vent their anger at the MCCB and may feel justified in blowing the whistle on their competitors in the broker market.
The MCCB is playing its cards very close to its chest, with various representatives saying that an unspecified “something” will be done about this in the New Year.
By April, it will be easy. This is when all mortgage brokers must re-register with the MCCB. They will be required to send in a copy of their CeMAP certificate as part of the process. It will be most interesting to see what, if anything, is done before that date.
So what does all this mean for the unqualified brokers who will continue to provide advice in the first quarter of next year?
First of all, it is not a hanging offence, but even so I don't think you should publicise your activities and set yourself up as an easy target for the MCCB, which may be tempted to make an example of someone to send out a clear signal to the rest of the 'underground' unqualified brokers who continue to provide advice.
Before the re-registration process, you may well receive a circular communication from the MCCB regarding your qualifications. In which case, tell Mortgage Strategy and we'll provide you with some sound advice on how you should respond.
You will have various business development managers turning up on your doorstep in the normal course of the day. Some BDMs may take their cue from the three wise monkeys and not ask potentially embarrassing questions – like why isn't your CeMAP certificate hanging in a nice frame on the wall?
Others may take a more constructive approach and have a quiet word in your ear.
The question is very simple – what are you going to do? You will be in a position that is simply unsustainable. You cannot carry on for much longer; you are on an express train that will hit the buffers on April 1st. You are only delaying the inevitable and, while you may not care two figs for the gnashing of teeth within the upper echelons of the industry, you have really got to sort yourself out.
Whether or not you will do more damage to yourself, the longer you continue in this manner is a moot point. I simply don't know, but why take the risk ?
Either pass the examination, or consider Options 2, 3 or 4 highlighted in last week's issue and which will be examined in detail over the next few weeks.
As an aside, it would make for an interesting debate as to which body is in the greater state of self-denial at the present time – the unqualified brokers who think they can carry on providing advice indefinitely or the politically correct people in the industry who do not believe that the scenario depicted above is going to happen.
Next week we shall turn our attention to the first of the politically correct options – become an introducer and refer your mortgage clients to qualified brokers.
Bluff it out – until April Fools' Day
What to do when you go back to work on January 2 without having passed your CeMAP (or equivalent) examination:
Option 1: Pretend nothing has happened
Easy to do; no special action required
Continue to deal with clients as normal
Continue to submit mortgage applications as normal
Deliberately ignoring the MCCB rules
Danger of disciplinary action by MCCB, if found out
Blot your copybook when MCCB informs the FSA
You hit the brick wall on April 1st
Option 2: Become an introducer
Option 3: Downgrade to “information only”
Option 4: Become supervised
The pros and cons of options 2, 3 and 4 will be looked at in detail in the next three issues of Mortgage Strategy.