The topic of adding value to the packaging process, through the adoption of strong compliance practice is one which the Regulatory Alliance of Mortgage Packagers takes very seriously. With the growing speculation over whether packaging will be regulated, this practice has become an even more important topic for those packagers that have already recognised that the market is in a constant state of evolution and want to be part of that process of change.
The idea that a non-regulated third party such as a packager could sit between lenders and intermediaries, themselves both regulated, and play such an important role without needing to apply the same rigour to its processes as regulated businesses was always going to be flawed thinking. Now the likely outcome, after much deliberation, is that the Financial Services Authority is going to ” The move to principles-based regulation puts everyone involved in the mortgage business back on the learning curve”announce a change that will ultimately affect every packager in the UK. When it will come is anybody’s guess but it is time packagers start recognising the need for change.
The recent announcement by RAMP that it is seeking applications from up to 10 packager firms to join as associate members is the first step to open up our membership to a wider audience. The most important aspect is that, like our main membership, new associates will have to submit to the same compliance oversight and be expected to bring their business processes in line with RAMP’s code of conduct.
If anyone thinks this is restrictive, it is worth remembering all the RAMP founder members have profited by ensuring their businesses are aligned with those of their customers and just as importantly, their product providers, particularly the lenders.
As an industry, not only are packagers going to feel the winds of change. With regulation evolving, the move to principles-based regulation and the ending of the purely rulebook driven enforcement system puts everyone involved in the mortgage business back on the learning curve.
With its emphasis on firms plotting their own courses to implementing and fulfilling their primary compliance obligations, it will become even more necessary that each firm looks carefully to ensure its own interpretation of ‘principles’ can stand up to scrutiny.
The concerns that RAMP has is for smaller firms which may not have the budget for full-time compliance advice but which are going to be the most vulnerable when it comes to the acid test of how they have interpreted the new regime. I am sure many mortgage adviser firms and other intermediaries are going to need a helping hand.
In the final analysis, the packaging alliances and associations need to be ready to offer the kind of compliance services to both intermediaries and smaller packagers that will help them to better understand the changes that are going to take place and which will have a fundamental effect on the way we all have to do business.
Compliance is going to be the watchword for all our businesses from here on and those that are prepared to put in the hard work now will be in a better position to take advantage of the new playing field later on.