What does the MCD bring that MMR did not? To the advisers already providing an all-round quality service then it may be relatively little. The change from a KFI to an ESIS and tweaks to stress testing are purely fine tuning, they are not actual material change. Material change already occurred when the MMR came into force.
The MCD will require advisers to consider all other lending options as part of their advice process including second charge lending, however many advisers will already be factoring this into their current process, especially where customers have ERC’s in place, mortgages with large amounts on interest only and where customers may be on exceptionally competitive rates.
Finding a second charge partner who they can trust to work with the same diligence as they do will be a key consideration for advisers.
Second charge brokers already in the market place have historically worked as packagers rather than advisers, fitting customer to lending criteria rather than considering best advice and affordability to the level of the first charge advisers remaining in the market.
It is this side of the sector along with all previously non-FCA regulated sectors that MCD will most impact upon. It is the master brokers who are prepared to embrace change and move forward that will find most in common with our excellent mortgage advisers in the market place.
MCD will see the same sort of change for the previous sectors outside of the FCA and this can only be a good thing for customers. I have praised the advisers for the great work done in the first charge market and after all, with fees traditionally being so much higher in the second charge sector than the first, surely it follows that the customer should receive at least the same level of service?
Progress has been made in the second charge sector, but change now needs to go further. Brokers need to become advisers when required and match the service and commitment to quality advice that has further developed in the first charge market since MMR.
This is a whole new skill set for many but one that has been embraced so far. It is progressive development for each individual as well as the second charge companies and equips them to perform their role to a whole new level. CeMAP is the start of the education, and time and experience can develop this further.
We’ve implemented a new initiative for Clever Lending colleagues and they are now all spending significant time with current experienced mortgage advisors to ensure they can walk the walk and talk the talk. The aim being to improve knowledge and service for both the short and long term.
What about Buy-to-Let? My mentality in all firms I have worked with since the original ‘M’ day in 2004, is that the best philosophy is to treat all mortgage recommendations as if they were regulated. A buy-to-let customer (whether consumer or business) deserves the same high level of service. I see no advantage (indeed there may many disadvantages) of running a two tier service protocol.
The same case should also be made for commercial finance. I’ll admit to having less experience in this area, but surely the principles outlined above remain valid? You could argue that because many commercial cases by their very nature are more complex, even more effort and precision need to be put in place to ensure high levels of service throughout the application and underwriting process.
It has been reported that compliance and regulation has its costs and some firms will struggle to see beyond these, and look for shortcuts and make-do’s. But in terms of customer service, clear documentation and quality, it offers a significant element to the customer experience. After all a satisfied customer will return and make referrals – word of mouth is still a powerful sales tool.
In summary, we should aim to treat every customer as if they were applying for a regulated loan and provide them with a service that matches – would that be such a strange philosophy?