The mortgage event
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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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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 effectiveNO


  • 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


    E commerce

    E - Commerce


    E commerce business levels

    E - commerce business levels


    Online growth

    Online Growth

    Average online business:

    • Now38%

    • In one year47%

    • In 5 years80% ?


    Niche lending

    Niche Lending


    Niche lending current

    Niche Lending - Current

    Intermediaries think niche lending is:

    • Extremely / very important45%

    • Quite important35%

      ____

      “Important”80%


    Niche lending future

    Niche Lending - Future

    Intermediaries think:

    • Much / a little more important64%

    • Less important 3%


    Niche lending products

    Niche lending - Products

    Current importance of individual markets:

    • Self Cert21%

    • Buy to Let13%

    • Sub prime11%

    • 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 lending importance

    Niche Lending - Importance


    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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