To some lenders and intermediaries, it's no coincidence that the new regulatory regime comes into force on Halloween. For them, M-Day is a real-life horror story, something to fear as they count the costs and implications for their business. At The Derbyshire, we believe regulation is no pumpkin but will benefit the consumer, and thus our industry.
Preparing for regulation has been onerous and the costs of compliance will be high but this is a fair price to pay for regaining consumer trust. High-profile scandals together with small day to day injustices have resulted in far too many people reacting to their treatment from financial institutions with the heartfelt cry: 'That's not fair!' M-Day is about stamping out unfair practices.
“Mortgages should have been regulated years ago,” says Ray Jones at Nelsons' Solicitors. “Competent advisers must welcome regulation as a way of improving the image and professional standing of our industry.”
Chris Mayor, a broker at mac4mortgages, based in Burton-upon-Trent, agrees. “The professional broker who is in the industry for the long-term will regain their position in society,” he says. “All advisers should be subject to examination of their conduct and performance to take the worry and myths out of lending. Regulation and proper accreditation will do this for those who are serious about the task they are asked to perform by their clients. There is little need to worry for those already doing this.
“Unfortunately, this has taken a long time and some have taken the opportunity to try and make money, driving costs up and derailing part of what regulation is about. These costs must eventually be passed on to the consumer.”
But ultimately, consumers will benefit from a fairer deal. No longer will they have to trawl through mountains of small print to weigh up the true costs and implications of their mortgage. The Key Facts Illustration detailing all the key details of the mortgage deal will have to be issued to the client before a commitment is made.
Borrowers will be able to make a more informed choice as the KFI breaks the costs down per pound over the mortgage period and confirms their requirements.
What's more, the risks associated with the mortgage will be pointed out – so important in today's culture. With the KFI highlighting the impact of rising interest rates and falling incomes, borrowers will be forced to face reality and enter deals with their eyes open. Gone will be the printed quotation designed for a quick sale as the KFI will enable borrowers to ensure that they benefit from affordable and suitable mortgages. They will also be aware of the maximum early repayment charge payable and the size of procuration fee that the intermediary may receive.
The KFI will become a valuable tool of the trade for intermediaries, as they will be able to compare products on a like for like basis. Accurate KFIs must be available from the sourcing systems. Lenders such as The Derbyshire will be making it as easy as possible for intermediaries to provide KFIs to their customers by making penny-accurate ones from its dedicated intermediary website: www.is.thederbyshire.co.uk Regulation is only a headache to those firms that still do not accept it is their responsibility to ensure fair treatment of customers is central to everything they do. They are blind to the opportunities for acquiring and securing customers in a fiercely competitive market. At The Derbyshire, fairness is a driver to achieving our ambitious growth plans. For us, fairness is not a campaign, it is a way of life.
The Derbyshire is the only building society with a Fairness Forum. This provides a channel for customers to have a say in the way we do business. It encourages people to ensure that The Derbyshire delivers on fairness. Our Ratewatch service means we keep an eye on competitors' rates (more than 300 in all) to ensure ours are as keen as they can be. If any of our products are not offering good customer value, we will do our best to improve them.
This is an imperfect world, but it can be a fairer place for the consumer. For The Derbyshire, mortgage regulation is no nightmare, but the first step to restoring trust and integrity in our industry.