1. Can you tell us a little bit about AMI and your role?
The Association of Mortgage Intermediaries – often referred to as AMI – is a regulatory and lobbying trade association that represents mortgage intermediary firms in the UK. AMI exist to represent member firms’ interests and to deliver a better business environment for them. Our main objective is to promote the provision of good advice as an essential part of a healthy market for mortgages.
This advice needs to operate in the interests of consumers, of which protection is an important part. We work with regulators, government, consumer groups, the media, providers and other industry bodies. I work as a Senior Policy Adviser, and a large part of my role is focused on GI and protection.
The last two years I’ve worked on AMI Viewpoint, a comprehensive consumer and adviser market research report on protection. I also spend a lot of my role reading; analysing and responding to regulatory consultations to ensure the mortgage intermediary voice is heard; horizon scanning to keep abreast of forthcoming changes; and presenting papers to the AMI board to make sure we’re focused on topics that are most important to the firms we represent.
Outside of protection and GI, some of the other topics I’m involved in include the Consumer Duty, vulnerability and the AR regime review. 2022 is already turning out to be another busy year as there’s lots on the regulatory agenda. We’re a small team but I like to think we pack a punch in terms of what we achieve!
2. Within AMI you have a Protection Specialist Group. What do they do and how are you using them to drive change in the industry?
In 2020 AMI created our Protection Specialists Group (PSG), made up of individuals from AMI member firms. The group is diverse to ensure we have a wide range of views, with participants ranging from Proposition Directors to mortgage and protection advisers. The group discusses and debates topics that are currently relevant to GI and protection products and affect a mortgage intermediary firm. This includes market issues, regulatory consultations and industry collaboration. We also use outputs from the meetings to shape AMI’s policy and lobbying positions and develop future strategy in this area.
A discussion on the cost of living crisis at a PSG meeting led to AMI, the PDG and the IPTF refreshing the adviser guide and saw the creation of a new consumer guide. The group has also discussed in depth the findings from the last two Viewpoints, with firms sharing how they’ve used the research to make changes in their businesses. For example, some firms now focus more on what protection products do rather than what they’re called, as well as firms that have re-considered what a ‘memorable and meaningful’ protection conversation is, following our 2020 finding that only 36% of consumers recall protection being mentioned by their adviser.
3. What are the biggest changes you’ve seen in the mortgage and protection market?
Over the last couple of years, we’ve seen many mortgage advice firms embrace social media as a way to connect with both existing and potential clients – a lot of this was driven by the Covid-19 pandemic as firms had to think about new ways to engage in a virtual world. It’s been great to see the use of social media continue as the world has ‘re-opened’ and I think it’s an excellent way for mortgage advice firms to help educate consumers on what protection is all about.
Our 2020 Viewpoint research found that consumer understanding of some protection products is low, particularly income protection where only 31% of consumers correctly identified the product when showed a definition. Our 2021 Viewpoint research showed that 25% of mortgage brokers are passing clients onto protection specialists, up from 14% in 2020. It’s great to see more mortgage brokers consider the ‘write it, refer it, don’t ignore it’ message and I think signposting will become even more relevant and important with the FCA’s Consumer Duty coming into force in 2023.
4. What do you see as the biggest challenge for brokers over the next couple of years?
I’d say the increased cost in living is a big challenge. More customers are getting in touch with their mortgage adviser to discuss rising interest rates and how this impacts their borrowing ability. We are also starting to see lenders factor rising costs into their affordability calculators. As we navigate this challenging period, customers may need the support of a mortgage broker more than ever to understand the options available.
On the protection side, there are concerns that some customers may cancel their protection direct debits to save costs. The industry had the same concern during Covid-19 but thankfully there didn’t seem to be a significant uptick in cancellations. However, I think we’re in a very different situation with the cost of living crisis as people are not supported by furlough or self-employed grants and although there has been some government assistance (such as the council tax rebate on eligible properties) for many this doesn’t go far enough. Some consumers will be forced to make tough decisions on their expenditure.
Advice firms have an important role to play in ensuring they engage with their customers; prompting them to recall why they purchased protection in the first place, highlighting the support that may be available and encouraging customers to speak out as soon as possible if they are struggling financially, as cancelling cover could further exacerbate existing financial difficulties should death, illness or injury occur. It’s why AMI has collaborated with the PDG and the IPTF to create the refreshed adviser guide to saving protection policies and a consumer facing guide – these are available to all firms.
5. What do you see as the biggest opportunity over the next couple of years?
2022 and 2023 are set to be big years for re-mortgages and product transfers due to the high number of five year fixes set to mature. With the increase in the cost of living, advisers are also seeing borrowers coming to the end of their fixed rate deals looking at options earlier than in previous years, to lock in before rates change. I think this will continue to keep mortgage brokers very busy over the next couple of years, even if purchase sales start to slow.
Re-mortgages and PTs also create another valuable protection touchpoint. It’s encouraging that 92% of mortgage brokers say they re-visit protection conversations at re-mortgage or PT stage. What’s important is making sure protection conversations are embedded as part of the re-mortgage or PT process and for the adviser to take a step back, put themselves in the customer’s shoes and assess ‘is this protection conversation both memorable and meaningful?’ If not, AMI encourage firms to be proactive and review their processes to see if improvements can be made.
6. What important things are coming up and what should we watch out for?
There’s lots coming up from a regulatory viewpoint but if I’m to pick one topic that should be on the agenda for every mortgage intermediary firm, it’s the FCA’s Consumer Duty. Designed as a suite of measures, it can be best described as a paradigm shift that should not be seen as simply a re-working of Treating Customers Fairly. All firms will have work to do, some more than others.
AMI have an important role in digesting and analysing the requirements for the benefit of our members and plan to work closely with other stakeholders such as lender trade bodies to understand where responsibilities lie in the manufacturer-distributor relationship.
