First up is payment protection insurance. In its market study, the Office of Fair Trading proposed referring the PPI market to the Competition Commission. Towards the end of this month we will not only find out if the referral will go ahead but also which of the five PPI sectors identified will be excluded, if any.
In its study, the OFT was only minded to exclude store card PPI but the Association of Mortgage Intermediaries has made the case for mortgage payment protection insurance to be excluded too.
But even if MPPI is excluded from a referral, this does not mean the scrutiny that PPI sales are under will lessen. Before Christmas we saw the Financial Services Authority penalise two firms for failing to treat customers fairly in PPI sales. The regulator made it clear that other cases were pending and we expect a large number of final notices to be issued in the coming weeks. Firms should need no further encouragement to review their PPI sales practices.
At the end of May the focus will be on the European agenda as we expect the mortgage White Paper to be published. This will cover loans secured on property, affecting both first and second-charge lending.
The Green Paper was published by the European Commission in 2005 and raised the issues of compulsory advice, early repayment charges, calculation and disclosure of the APR and the standardisation of contracts.
Many industry figures query the need for EU legislation. They are not convinced the internal market is failing and can’t see much demand for cross-border sales. AMI agrees that the last thing the UK mortgage intermediary sector needs is more regulation. We favour stability and recommendations from the EC must not impinge on the good working order of the UK market.
Finally, my key word for 2007 – standards. This year should be all about improving them.
I have said this many times but it is worth repeating – are they compliant with Mortgage Conduct of Business rules? If not, you must improve them. What about your standards of record-keeping? Are your recommendations easy to understand? Do all your clients receive a suitability letter? How can you boost your firm’s professional standards? Are all your advisers suitably qualified? Are advisers giving advice on equity release products without a specialist qualification? Your staff’s training and competence should be a priority.
AMI exists not just to lobby but to help you reach the necessary standards. Take advantage of your membership.