Posted: 11th November 2013
Take a step back. All lenders and mortgage intermediaries must make adequate preparations for the Mortgage Market Review (MMR). For a regulatory change programme of this size and scale and with the implementation date fast approaching, getting it right first time round must be the aim from three perspectives:
MMR is a substantial piece of new regulation. Getting your policies and procedures up to the standards required by the regulator is an important first step. These include your current advised mortgage sales process and responsible lending policy.
A comprehensive gap analysis by conduct risk experts reviews key aspects of the mortgage sales process including a firm’s approach to lending into retirement, debt consolidation, affordability and record keeping. It provides detailed recommendations about the steps you need to reach compliance in a post MMR world. Firms must also ensure their quality assurance functions are robust, focussed on good customer outcomes and supported by high quality management information enabling senior management to have effective oversight.
A key aim of the removal of the non-advised sales process is to increase professional standards across the market. The most substantial change is for direct lenders because any individual involved in an interactive sale with a customer will, post April 2014, conduct this on an advised-only basis. Increased professionalism will also be achieved through the requirement for every seller to hold a relevant mortgage qualification. With the increasing focus on behaviour and culture within firms as the key to ensuring positive customer outcomes, the importance of equipping your people in time cannot be overstated.
A thorough review of your preparation for MMR from an employee perspective will help to assess the ability of your employees to engage with the customer in an advised sale. Reviewing your people strategy – in recruitment, training and competence – is a vital part of ensuring MMR readiness.
Customers’ point of view, their experience and the service they receive, is often missed in MMR preparation. Our approach to customer insight uses industry professionals to undertake ‘mystery shopping’. Using industry professionals not only assesses how well your advisers engage with the customer from a customer experience point of view; importantly you gain insight into your compliance: the mortgage adviser’s understanding of needs (know your client), the suitability of the mortgage contract and the adequacy of disclosure.
Independently reviewing your mortgage proposition allows you to understand which areas require development and action, whether in policy, process or employee training. Seeing things from these points of view gives you the full picture on MMR.
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