Mortgage distributors, by adapting like chameleons to the changing commercial environment in which they operate, have been able to ensure their survival in recent somewhat turbulent years.
Over the past 15 years few commercial climates have changed more dramatically than that of the UK mortgage market. But distributors have shown a resilience and invention many did not believe they had in overcoming the constant challenges they have faced. And they now enjoy the strongest position they have ever held in the market.
While many have criticised the fragmented nature of distribution in the mortgage market as a weakness, it has also been one of its greatest strengths. Small firms have proved to be nimble and quick-witted and have altered course to suit the prevailing winds faster than many of their bigger corporate rivals.
Over recent months there has been a further sea change in the environment and it looks likely that the distribution market can further bolster its position with some relatively small changes.
Enforcement fines for firms selling payment protection insurance are lining up in the Financial Services Authority’s administrative system and regular announcements are expected over the coming months.
GE Capital Bank was recently fined £610,000 for its part in the PPI debacle, which has largely been of the industry’s own making. But as conditions change, those reacting quickest will reap the greatest rewards.
There is now little doubt that there will be serious changes in the design, sale and claims processes employed by both providers and distributors. The FSA is conducting research and has demanded changes to improve the consumer experience and the value they get when buying policies. Meanwhile, the Competition Commission is about to examine the market and when its findings are published there will doubtless be further alterations required.
Despite these reviews there are a number of firms already looking at the design and distribution of PPI within the personal finance and mortgage markets and the changes they are introducing could provide a greater level of access to independent products than has ever been available.
Both The Exchange and Webline are updating and developing the products they offer intermediaries in the PPI sector and are making a concerted effort to bring them the best in value and design from providers across the market. They are not focusing on the policies offered by the high street brands, but have decided to look at the independent market where pricing and cover has over the years proved to be substantially more competitive and flexible.
By making these policies easily accessible, it will be easier for intermediaries to offer their clients cheaper cover, and given the media attention that PPI has received over recent months, there is an increasing demand from consumers to get their hands on the best the market has to offer.
However, it is not only the likes of The Exchange and Webline that should be looking at the improved distribution of PPI. This is also an area where packagers can help their intermediary partners.
Packagers have established themselves as the gatekeepers to inaccessible mortgages in the non-conforming market and have done an excellent job in making them available for intermediaries and their clients. There is no reason why packagers should not now begin to create the same sort of tailored panels for PPI as they have for non-conforming mortgages. This would help to give them a competitive edge over their rivals, as well as help intermediaries so