Ask intermediaries about the standard of service they get from the packagers they use and the chances are they will not be terribly complimentary.
It pains me to say this but there are many packagers working in the mortgage market who would be surprised to be informed that they actually work in a service-driven sector. They are there to service the needs of their intermediary customers quickly and as efficiently, but in this they often fail to do this miserably.
I know of packagers where 80% of the cases they submit to lenders on behalf of intermediaries have to be sent back for correction and amendment. It is not unknown for cases to be sent back to the packager two, three or even four times before it is finally able to be processed by the lender. Underwriting decisions can be poor, as can performance in answering the phone and maintaining regular contact with intermediaries.
As a result, these packagers, instead of taking 14 to 28 days from sign-up in the home to completion – as is the norm with members of the Regulatory Alliance of Mortgage Packagers – take anything up to seven or eight weeks. And when business is surging ahead such delays can be even longer as staff try to process more applications than they, or the systems they use, can handle.
I am not aware of a single packager that has told its customers it is having to limit the number of cases it is accepting to ensure that service delivery standards are maintained. However, this is precisely what some packagers should be doing given the lack of planning and structure evident within their organisations.
Packagers should focus on service, individual deals and ensuring that they have the necessary structures in place as this will pay dividends for them in the longer run. Closer ties and service standards will mean that the packager can be more effective at building its business. In turn, intermediaries will begin to realise that the packager can turn around an application within a typical timeframe of within 28 days, and that they will not be bounced between the packager and the lender.
The primary reason for poor service is the quality and training of staff. You have to question whether some packaging staff who process mortgage applications have the necessary training and competence to perform their jobs correctly.
Packagers resubmitting mortgage applications is an obvious example of where training is painfully lacking. Not completing the application forms adequately in the first place is the reason these applications are going back and forward. This in turn is the result of insufficient investment in training.
And packagers' staff should not need to be asked for additional material – they should be able to anticipate lenders' needs. If they were well trained they would know before they sent it off whether an application would be accepted by a particular lender. If such packagers focussed on the skills needed by their staff to work with lenders these problems would not arise.
Modern management practices are a mystery to some packagers – that's why Financial Services Authority regulation is coming as such a shock to them. Most would not be able to say whether they had sufficient senior management controls and organisation in place to effectively manage and control their businesses (as set out in FSA Supervision Handbook CF1 to CF27). They should all have a robust training and competence regime and a system for the regular assessment of employees in place. During induction, employees should be fully supervised and trained as necessary.
Does the firm have succession and disaster recovery plans in place? They should have arrangements that ensure their businesses can continue to function in the event of an unforeseen incident. Disaster recovery arrangements should be regularly updated and tested.
Do they have a complaints handling policy to ensure that all customer complaints are handled in accordance with minimum requirements? Complaints must be handled fairly, effectively and promptly and records must be kept.
What about data protection and consumer credit? Packagers should ensure they have in place a valid data protection notification and, where relevant, a consumer credit licence. Procedures to protect personal data should be implemented that ensure compliance with the Data Protection Act 1998.
These are all necessary checks and balances but you can be sure that not all packagers will have them in place by the time Mortgage Day arrives.
FSA regulation is raising everyone's game in the mortgage market and only those packagers that embrace it and work to the highest possible standards will thrive. RAMP is setting the pace in the packaging community and earlier this month unveiled its code of conduct which covers all of the above-mentioned areas.
It's a pity that other organisations, such as the Intermediary Mortgage Lenders' Association do not feel the need to implement such quality regimes (Mortgage Strategy, August 1 2004).
The RAMP code gives intermediaries peace of mind when dealing with members. This will not be the case with other packagers. The code will promote honesty, integrity and reputation and also demonstrate competence and capability.