The value of any alliance, club or organisation that brings together individual members is to exploit the value of the group dynamic in such a way that it provides advantages and opportunities for all involved. In the distribution market, the number of groups and distributors which have other packagers feeding business into them has grown hugely over the last few years. Without exception, the major advantage for all of them has been one where there has been a major opportunity to use their joint muscle to provide better products, service and fees for introducers for introducing the business.
The days when individual packagers, particularly the smaller ones, could compete with larger players are long gone. Even providing a local personal service that has been the main advantage of smaller packagers for some time will not be enough to help them survive in the regulated environment where intermediaries have no choice but to go where the best deals are. Increasingly, smaller packagers acting on their own are not going to be able to source these deals. They need to be a part of a larger whole.
When regulation was introduced there were many who believed that as pure packagers were outside the regulatory envelope, they would be the least interested in compliance and the effect it would have on the rest of the market.
In many respects, this has proved to be correct. With the exception of a small number, the majority of distributors and packaging associations have had little or nothing to do with understanding the ramifications and effect compliance would have on the rest of the industry.
But in two short years the importance of regulation and compliance has permeated every facet of the business and distributors that have ignored its position as one of the major drivers of the market have underestimated the importance regulation had from the start and, more importantly, the continuing influence it is having as we go forward. Compliance is an evolutionary factor in the industry and not a one-off event as many believed it to be.
When the Regulatory Alliance of Mortgage Packagers was formed, it was able to command greater attention from its serv” Networks have seen the advantages of dealing with distributors that have taken the principles of compliance seriously “ice providers but that was not the main reason to bring its members together. Rather, as the name suggests, RAMP was set up to offer its members a focus on the most important factor to have an impact on the industry, namely, regulation and its effect not only on packagers but also on the wider market.
RAMP is unique in that it has two full-time compliance experts who help to co-ordinate the activities of all its members’ compliance departments and the way that, as a group, RAMP members are able to offer a compliant methodology to their introducers, its products and service providers.
The future for the dominant position of packagers at the centre of mortgage distribution will have to reflect more and more the need to be an important part of the quality circle which has treating customers fairly at its heart. The whole question of regulatory support and the assistance given by packagers to their lending and intermediary partners to help them achieve their regulatory obligations will have a huge bearing on which packagers continue to thrive.
As regulated entities, lenders have a number of responsibilities that were not there before regulation and primary among those is to ensure that when they are dealing through third parties, such as packagers, the client is receiving the best possible service and RAMP members, thanks to the work done over the past two years, has proved that this is the case.
As far as intermediaries are concerned, the value of a compliance-centred packager alliance is becoming more apparent. Whether it is to ensure that products are being correctly presented and accurate information is available, to the quality of the online tracking and the subsequent availability of data to provide a robust audit trail of activity.
Networks have seen the advantages of dealing with distributors that have taken the principles of compliance seriously and are able to work with them to ensure that the mortgage sales process is compliant.
This year the move to principles-based regulation will really take hold and more than ever, lenders and intermediaries are going to need the reassurance that dealing with packagers with a real understanding of the ramifications can bring.
By John Rice, managing director, Regulatory Alliance of Mortgage Packagers