Posted: 2nd April 2013

The implementation requirements of the MMR present a double whammy for direct mortgage lenders. Not only do lenders now have to reconsider their approach to affordability and review how their operating model needs to change, they also face the move to an advised only sales process for the majority of interactive sales.

Some lenders have already signalled major operating moves, the stand out one being Barclays’ decision to require all telephony sales staff to be CeMAP qualified. A number of other lenders are considering altering the way and channel by which they have sold mortgages to ensure they meet the MMR challenge.

The main change for all branch based retail lenders is the requirement to move to an advised only selling environment. Whilst it is too simplistic to say that the old means of mortgage selling is akin to order taking, a lot of the sales systems and processes operated by lenders do equate to this. In order to sell on an advised only basis the seller will need to take more control of the conversation. (See our recently published article.) This means establishing greater rapport with the customer and really getting to the heart of that customer’s objectives, aims and needs. Many lenders have recognised this challenge and have major programmes planned or currently underway.

One final thought: the regulator has given the industry an implementation timetable of 18 months from the publication of final rules. This long lead time recognises the systems challenges and changes required for mortgage lenders. There will be an expectation that firms are compliant prior to 26 April 2014 ready for a smooth change over. No doubt the Financial Conduct Authority will be keen to test firms’ readiness soon into the new regime. Firms’ planning and implementation should definitely recognise the generous nature of the 18 month lead in.

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