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The price we pay for a fragmented industry

For many years I have lobbied that there should be less fragmentation in the industry and this has certainly been the case in the area of the Financial Ombudsman Service.

Both practitioners and consumers benefit from fewer organisations within the mortgage industry. This week’s article focusses mainly on the former, as it appears that there is a price to pay for all the noses in the trough. One of my objectives is to try and throw some light on the number of organisations that exist and whether or not their remit and benefits can be identified.

Let’s turn the clock forward to January 14, 2005 and assume that insurance and mortgages are regulated by the Financial Services Authority. Naturally you have no choice but to pay for regulation whether it’s via direct authorisation or as an appointed representative of a network. Either way get your cheque book out. There can be no argument that to conduct mortgage and related insurance business the FSA is top of the pile. If you are an appointed representative your network partner is next in line. If the network propaganda machines are to be believed then there is no need to worry about compliance and if you have any problems then all you need to do is phone the helpline.

But wait a minute. You still have to be qualified and you would like to put some letters after your name on your business card. Well, if you are MAQ qualified with the Chartered Insurance Institute, although you have toiled to earn your qualifications I’m afraid you have to pay £20 a year to use the designation CII MP (MP being Mortgage Professional).

Apologies, but the news gets worse because CII membership renewal costs £50 a year.

However, there is good news for the majority of brokers who have qualified with the Institute of Financial Services, the official brand of the Chartered Institute of Bankers.

It does not charge anything for its designation of CeMAP to demonstrate to customers an adviser has achieved the industry standard mortgage qualification. My suggestion is that the FSA steps in and rules that one designation serves all qualified mortgage advisers and the whole industry can then promote this single designation to consumers.

We have the relatively new Association of Mortgage Intermediaries but, as far as intermediaries are concerned, it still means quite a substantial cost to them even though AMI will no doubt put up a good argument for its existence.

Then along comes the announcement of the CII’s Society for Mortgage Professionals, headed by former MCCB director Richard Fox. Sorry if your head is spinning with all these abbreviations (it stands for Mortgage Code Compliance Board) but that is part of the point I’m trying to make here. Now, those that take an interest in these matters will know that Chris Cummings, director of AMI, also sits on a panel at SMP. When the SMP announcement was made I viewed SMP as a competitor of AMI – but then again may be I got that one wrong.

Time for some more good news as I am beginning to sound a tad laborious now. You will be pleased to learn that the LIA is merging with the Society of Financial Advisers in January 2005 to form the Personal Finance Society. Did someone say, “Thank goodness, that’s one less organisation to remember.”

Apologies again, but just when respite is in sight, there is another one looming on the horizon – the Independent Mortgage Association ( The IMA is the brainchild of Danny Mahon, who some readers will know was a co-founder of Homebuyers Advice Centre in the early 1980s.

When I spoke to Mahon he was quick to say: “It could well be said that HAC was the first mortgage network in the UK. In its heyday, the group transacted more than £500m in mortgage business each year. A sister company, Mortgage Administration Centre, was formed to process applications on behalf of the lenders which, in so doing, gave rise to the entity known as packager. HAC was the first organisation to receive a procuration fee from lenders and many of the current industry products and services can trace their origins directly back to HAC. Similarly, companies such as PaymentShield, Mortgage Debtline and others were all hatched from the same stable.”

Now if you need a help line to unravel this mess, or for other general matters, there is quite a choice: the FSA; a network; AMI; IMA; LIA; SOFA; SMP; CII and IFA.

And of course you can always phone Uncle Tom Cobberley or the Good Samaritans. Those of you who have had the patience to keep reading to this point, please don’t shoot the messenger. I’m just reporting on what is happening in this wonderful arena of ours.


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