September 2016 – A bounce in our step
With the news that the July CML gross lending figures came in at £21.4bn, it gave me a bit of a bounce in my step. With gross lending having grown solidly through 2013 to 2015, we were hopeful at the start of the year of perhaps a rise from the 2015 number of £220bn to around £240bn in 2016. However having had the Buy-to-Let blip in quarter one and the referendum result which has created a political crisis as we are still fighting our way out of the Banking crisis, I see this July number as solid news. The first half totalled £120bn and with the July number we are still very much on track for 2016 to be another step forward. I am not sure we will reach the £240bn number but we should reach well over £230bn for the year.
The main thing to remember is that all market growth tends to come through the intermediary sector. With the package of measures brought in at the last Monetary Policy Committee meeting, there is a real impetus to keep the UK lending for mortgages. Rates are likely to remain low for some time and there is a lot of opportunity to help more people as stress rates come down and criteria are softened. It should be a good time to be a broker talking to all their client bank. At the risk of giving the Outlaw a target to shoot at, I am prepared to say that we will see a gross number of £237bn for 2016.
At AMI we are in deep conversations with the FCA on a range of complex areas. Whilst we cannot go into detail as we are involved in pre-consultation debates to inform their thinking and test possible solutions, as the broker trade body we are being listened to across a wide range of topics. These include trying to develop a fairer approach to the Financial Services Compensation Scheme, what a new Senior Persons and Certification regime to replace Approved Persons might look like, the scope and content of the Mortgage Competition review and how we deal with the financial issues facing our Ageing Population. These all have the possibility to affect all advisers in the market.
We have also been continuing our pressure on broker concerns on mortgage prisoners and ensuring we understand the requirements on post MMR suitability and the responsibilities of networks and their appointed representative. What has surfaced again however with the fees invoices now landing on people mats, is the cost of the FCA and related activity. One small member firm shared with us their bills over the last few years. What used to be a steady £1500 during 2012, 13, and 14 escalated to over £5k in 2015 and is still over £4k in 2016. The 2015 blip was caused by needing to get authorisations for activity that they have always done, but the regulatory regime has changed. It is not fair for the FCA to talk about a minimum fee of £1048 for small firms, when the invoice they generate on behalf of all the entities they “support” is almost 3 times that.
Also coming into focus is their new approach to supervision where very few mortgage firms are under direct supervision. This means that we have firms paying over £250k per annum just for the FCA whose access point is the call centre. I am not sure who is doing the value for money equations at the FCA but surely they can see that the amount of money they are taking for a remote approach is not working for good firms. Work in progress in our eyes.