Gary Salter is Nationwide’s head of corporate accounts
Regulation has received a bad press among parts of the mortgage industry in recent months.
The main criticism being that the industry is being swamped with extra paperwork at a time it should be focusing on business and getting the market moving again.
But from a broker’s perspective, the Mortgage Market Review is widely seen as a positive move and will help them to do more business.
In particular, brokers have welcomed what they see as a set of well thought through policies, most notably the changes to Key Facts Illustrations and mortgage prisoners. And most importantly the requirement for advice.
The arrival of the MMR on April 26, 2014, is unlikely to be a ‘big bang’ event as M Day was a decade ago, when the industry last saw significant regulatory reform.
By the Spring next year, when the rules come into force, lenders will have to have implemented the changes to ensure they are compliant.
At first glance, the changes may not seem to impact brokers as they currently provide advice and will continue to do so. However, there will be a change in the way lenders and brokers interact with one another.
For example, brokers will be responsible for the advice given while lenders will be responsible for the affordability - both now and in the future.
It means more emphasis will be placed on underwriting at the outset, with lenders likely to ask for additional documentation to support their lending decision.
Transparency from lenders about their policies will be key to the process of ensuring the relationship between lenders and brokers remains in tact during this period of change.
Certainly from our perspective, Nationwide will do all it can to ensure brokers have the information they need ahead of the changes, so that they can understand and apply it fully when making a recommendation.
Lenders will be looking closely at the quality of business submitted by brokers and expectations around the admin quality will be high from an administration and risk point of view.
Lenders are likely to only deal with those who meet their own standards – particularly as there are no immediate plans for individual brokers registration.
This process already started to emerge last year, with Nationwide confirming it would return paper applications to brokers who failed to complete them with the required information. It came after we identified 40 per cent of paper applications having critical information missing, resulting in large resources being spent chasing it.
Brokers are going to need support from lenders and educating about what the changes mean to them.
With MMR just a year away, our strategy at Nationwide is to work closely with distributors and brokers to improve quality rather than to simply remove a broker from our panel. Our sales force will be making sure that we are listening to brokers and taking on board their feedback.
One of the ways in which we are doing this is through a number of events that we are planning in the lead up to MMR to ensure our strategy is fully understood and so watch this space.
Our aim is to make the transition to the new rules as seamless as possible and we will do all we can to help brokers achieve this.
