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The Mortgage Event. Vision of the Future. Tim Dawson Chairman IMLA. Vision of the Future. Content Regulation e-commerce Niche Lending. Role of FSA. The FSA has four statutory objectives: market confidence: maintaining confidence in the financial system;

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Presentation Transcript
the mortgage event
The Mortgage Event

Vision of the Future

Tim Dawson

Chairman IMLA

vision of the future
Vision of the Future
  • Content
    • Regulation
    • e-commerce
    • Niche Lending
role of fsa
Role of FSA

The FSA has four statutory objectives:

  • market confidence: maintaining confidence in the financial system;
  • public awareness: promoting public understanding of the financial system;
  • consumer protection: securing the appropriate degree of protection for consumers; and
  • the reduction of financial crime: reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime.

With the aim:

  • To promote efficient, orderly and fair markets and to help retail consumers achieve a fair deal.

Source: FSA Website - What we do

objectives of mortgage regulation
Objectives of Mortgage Regulation

To enhance consumer protection in two key ways:

1. Improvements to information about mortgages made available to borrowers, achieved through:

  • rules on financial promotions, designed to create high standards in product transparency
  • pre and post sale disclosure documents, to enable consumers to acquire clear information specific to their circumstances and in a standard comparable format
  • provision of comparative information and consumer education to help in the early stages of shopping around, and to raise understanding of mortgage products
  • measures to improve information provided to those facing arrears and repossession

Source: FSA website - Mortgage Regulation

objectives of mortgage regulation 2
Objectives of Mortgage Regulation (2)

2. Mortgage lenders need to be authorised by the FSA and to meet the following high level standards:

  • Threshold Conditions set out in the Financial Services and Markets Act (FSMA)
  • senior management responsibilities
  • systems and controls

Source: FSA website - Mortgage Regulation

mortgage regulation
Mortgage Regulation

Has Mortgage regulation achieved these objectives?

cost effective
Cost Effective ?
  • 40% of Intermediaries costs increased by 10%
  • 21% of Intermediaries costs increased by 20%
  • Costs to implement MCOB  £200m
  • MCOB annual running costs £75m - £150m
better decision making
Better Decision Making ?
  • 86% IMLA members think KFI not helped or made little difference.
  • 60% Intermediaries think clients don’t understand KFI
  • 70% Intermediaries don’t think clients use KFI’s to compare products
better decision making1
Better Decision making ?
  • 68% of Intermediaries don’t believe clients get better advice post Mortgage Regulation
  • 72% of Intermediaries don’t believe clients benefit from Mortgage Regulation
objectives of mortgage regulation1
Objectives of Mortgage Regulation

Improvements to information about mortgages made

available to borrowers, achieved through:

    • Financial promotions ?
    • Enable consumers to acquire clear information specific to their circumstances and in a standard comparable format ?
    • Help consumers shop around NO
    • Improve information provided to those facing arrears and repossession ?
  • Cost effective NO
mcob impact on market structure
MCOB Impact on Market Structure
  • More DR’s than expected
  • Few networks disappeared
  • Shortage of AR’s
  • No clear sign of market shake out yet
the future
The Future
  • FSA Plans:
    • Cost benefit review - 2006
    • Review of KFI - 2006
    • TCF
the future1
The Future
  • What the market would like:
    • Review of MCOB
    • Simplify regulation
    • Reduce cost
    • Involve / work with the industry
online growth
Online Growth

Average online business:

  • Now 38%
  • In one year 47%
  • In 5 years 80% ?
niche lending current
Niche Lending - Current

Intermediaries think niche lending is:

  • Extremely / very important 45%
  • Quite important 35%

____

“Important”80%

niche lending future
Niche Lending - Future

Intermediaries think:

  • Much / a little more important 64%
  • Less important 3%
niche lending products
Niche lending - Products

Current importance of individual markets:

  • Self Cert 21%
  • Buy to Let 13%
  • Sub prime 11%
  • 100% 6%
  • Equity Release 6%
niche markets growth
Niche Markets - Growth

Growth of Individual markets:

Equity Release +6% pa

Self Cert +5% pa

Sub prime +5% pa

Buy to Let +3% pa

niche markets conclusion
Niche Markets - Conclusion
  • Equity Release will become a major market
  • Self Cert will remain important
  • Buy to Let much less important
q a s

Q & A’s

End

and

Thank you

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