the mortgage event 2005 the mortgage event vision of the future tim dawson chairman imla
TRANSCRIPT
The Mortgage Event 2005
The Mortgage Event
Vision of the Future
Tim DawsonChairman IMLA
The Mortgage Event 2005
Vision of the Future
• Content– Regulation
– e-commerce
– Niche Lending
The Mortgage Event 2005
Role of FSAThe 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
The Mortgage Event 2005
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
The Mortgage Event 2005
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
The Mortgage Event 2005
Mortgage Regulation
Has Mortgage regulation achieved these objectives?
The Mortgage Event 2005
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
The Mortgage Event 2005
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
The Mortgage Event 2005
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
The Mortgage Event 2005
Objectives of Mortgage RegulationImprovements 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
The Mortgage Event 2005
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 Mortgage Event 2005
The Future
• FSA Plans:– Cost benefit review - 2006– Review of KFI - 2006– TCF
The Mortgage Event 2005
The Future
• What the market would like:– Review of MCOB– Simplify regulation– Reduce cost– Involve / work with the industry
The Mortgage Event 2005
E - Commerce
The Mortgage Event 2005
E - commerce business levels
Business Submitted Online
9%
17%19% 20% 19%
14%
0% 0%-10% 10%-25% 25%-50% 50%-75% 75%-100%
The Mortgage Event 2005
Online Growth
Average online business:Now 38%In one year 47%In 5 years 80% ?
The Mortgage Event 2005
Niche Lending
The Mortgage Event 2005
Niche Lending - Current
Intermediaries think niche lending is:
Extremely / very important 45%Quite important 35%
____
“Important” 80%
The Mortgage Event 2005
Niche Lending - Future
Intermediaries think:
Much / a little more important 64%Less important 3%
The Mortgage Event 2005
Niche lending - Products
Current importance of individual markets:Self Cert 21%Buy to Let 13%Sub prime 11%100% 6%Equity Release 6%
The Mortgage Event 2005
Niche Markets - Growth
Growth of Individual markets:
Equity Release +6% pa
Self Cert +5% pa
Sub prime +5% pa
Buy to Let +3% pa
The Mortgage Event 2005
Niche Lending - Importance
Importance of Individual Markets
42%
48%
60%
60%
Buy to Let
Sub Prime
Self Cert
Buy to Let
Importance
The Mortgage Event 2005
Niche Markets - Conclusion
Equity Release will become a major market
Self Cert will remain important
Buy to Let much less important
The Mortgage Event 2005
Q & A’s
End
and
Thank you