Don’t just focus on problems in MMR
Posted on July 19th 2010
I am sure that MMR is going to be a hot topic for a number of weeks and of course we should not under estimate the potential impact of the proposed changes. However, there was a fair bit of knee-jerk journalism last week, virtually minutes after the consultation paper (CP) was issued there were some pretty salacious headlines which to be fair might be correct.
There isn’t much in this paper that wasn’t in the previous discussion paper but I suppose it is now starting to dawn on people that these new rules are very likely to become reality. Lenders becoming responsible for affordability had some very interesting headlines with one stating that brokers would become almost irrelevant as a result. I found this very interesting and somewhat counter-intuitive; lenders have always been responsible for affordability as they are the ones lending the money. The fact that the FSA has now made it law will have no bearing on lender’s distribution strategies.
Another headline stated that lenders will limit their distribution as a result of MMR, again I disagree. Lenders will limit their distribution for a whole range of reasons none of which are exclusive to MMR. Income verification is a big issue for lenders, especially those of large scale and I can see this costing lenders and borrowers a lot of money but let’s not knee-jerk. There are many ways to verify income and I am sure each lender will come up with a viable solution; whether they choose to collect payslips or choose to outsource there are ways to do this efficiently.
Rather than staring at the problems I am looking for the opportunities MMR will bring, I have spotted a number already.
