Bob Hunt is chief executive of Paradigm Mortgage Services
The official ‘change over’ date for the Mortgage Market Review (MMR) is 26 April which, rather oddly, is a Saturday.
However, if the comments I’ve read or heard from most lenders are to believed it would seem that most of the industry is planning to be MMR-compliant some weeks before this.
In that sense ‘MMR Day’ itself (as I think I’m the first to call it) might appear to be something of a damp squib.
It’s encouraging, and perhaps a sign of the times that we are seeing a steady stream of lenders announcing their plans for MMR ahead of schedule and preparing both advisers and their clients for the changes required. Clydesdale and Yorkshire Banks are amongst the latest to outline their MMR intentions – interestingly, and some might say somewhat oddly, choosing 1 April as the day when they will be applying the new affordability criteria that MMR requires.
These changes will be no April fool however and the Banks have stressed that any applications submitted before 1, which do not complete before the 26, will be reprocessed if there are what it calls, ‘changes to the customer’s income or expenditure’.
It will perhaps surprise no-one that, even before MMR kicks in officially, there is the real potential for delays to the mortgage application process.
Of course it is completely understandable that lenders want to get ahead of the game in terms of MMR giving themselves a few weeks grace to ensure their systems are compliant and fit for purpose.
During the rest of March advisers will be bombarded with lender communications as they seek to outline their MMR timetables and the changes to documentation that are undoubtedly coming.
This ‘early compliance’ model adopted by lenders pushes the spotlight even more onto advisory firms, especially as we are just weeks away from these changes.
The good news appears to be that the vast majority of firms have heeded the multiple warnings regarding compliance – that have come from organisations like Paradigm – and are well on track to being ready.
The recent MMR readiness survey from the FCA revealed as much with 85% of firms who conduct mortgage business saying they were ready to implement the MMR on time. The other 15% were made up of firms who did not have their plans in place but were confident they would be ready for implementation (6%), firms who said they would fail to meet the deadline but wouldn’t undertake any mortgage business until ready (1%), and firms who said they planned to exit the market before MMR came into place (8%).
Given the lack of time between now and the start of April, it is perhaps that 1% who should be most worried – however even with considerable time pressures it is still possible to draw up a feasible MMR plan and implement it.
Paradigm has concentrated a great deal over the past year on taking a lead in providing DA firms with access to the information they need in order to secure their compliance.
This has meant publishing factsheets covering plan templates, key areas of concern, a focus on interest-only mortgages and the changes to disclosure documentation, as well as the rather important area of implementation.
These are all still available on our website and for probably less than an hour’s reading firms can get a strong overview of what is required, how it impacts their business and what needs to be done.
Don’t forget as well that we have a quality compliance service available to firms that will help take them through the process.
For those based in the Southampton area, it’s still not too late to register for our workshop on 26 of this month which will include an MMR presentation and Q&A from the FCA.
Before you know it March will be gone and then we will be truly in the ‘red zone’ when it comes to MMR.
Lenders and the FCA will expect advisers to be up to speed quickly and therefore this is the last chance saloon for firms to ensure compliance – if you don’t get it right now you will have to cease trading until you do.
And in this mortgage market to have to close the doors to business seems a lot like commercial suicide. The big question is, why take the risk?