Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
It was only a year ago that I returned to work after my Christmas break wondering what was on the horizon for AMI. The MMR had landed well although with some bumps. MCD looked not too troublesome and the market was making optimistic noises about gross mortgage lending of £240bn.
Then came 2015, the reality. A struggle to push on from £206bn in gross lending, savage fee increases from the FCA, a crippling FSCS levy for others fraud, a thematic study that challenged both the quality of advice and the network model, a competition study of the mortgage market, a financial advice review and Martin Wheatley being dumped by George for being too hard on the Banks.
That is without the worries of the Plevin commission case, how the Buy to Let market will deal with new income tax and stamp duty rules, the lowest stock of houses for sale in memory and more government housing initiatives than I have word space for.
And there was me wondering whether AMI had a real role in 2015 and beyond! Added to this we have the CML distracted by an unwelcome arranged marriage with the British Bankers Association and other trade bodies being challenged by their largest members leaving arguing that they would rather lobby on their own agenda than trying to agree an industry position.
One of the real strengths that the mortgage broker community has had in the last six years is that it has spoken with one voice and agreed about what it can agree about. It has not got bogged down in debates about trivia, trying to justify poor practice or debating issues where we can never achieve consensus. We will be working hard in the coming months to ensure a fairer financial settlement with the FCA. We will particularly be looking to renegotiate the deal on how FSCS fees are levied on the sector.
Looking forwards, one of the biggest risks facing advisers is on Buy to Let cases. It is now essential that all advisers are raising the income tax and stamp duty changes as part of the process on all transactions. They need to record that they have discussed the changes and advised the landlord to take advice from their accountant or a tax specialist. They should not proceed to place a case with a lender without confirmation that the borrower is aware of the forthcoming changes.
The other important decision to keep within the rules is to decide as a firm how to deal with the addition of second charge loans to their mortgage permission. Whether to advise, outsource or exclude from scope is an important decision, and needs to be captured in initial verbal disclosure as well as in tangible terms via some form of initial disclosure document. The new rules from March require technical adherence, but should not change the market.
Finally, as we move into 2016, we will see new lenders expand in to the market, almost all looking to brokers for their distribution. Selling mortgages direct is becoming less popular. We will also see the credit directive make it harder for those with foreign currency incomes to get a mortgage here in the UK. What remains clear is that in order to access the best deals in the market place having a good mortgage broker is the requirement for every consumer. Let’s trumpet that from the rooftops so that our place in the advice framework is both recognised and protected.