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Andrew Strange Senior Policy Analyst

AMI & EQUITY RELEASE ROAD SHOWS APRIL 2008. Regulation, regulation, regulation. Andrew Strange Senior Policy Analyst. AGENDA. The mortgage market and demand for professional advice Perceptions of equity release The equity released market Regulation: UK Europe

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Andrew Strange Senior Policy Analyst

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  1. AMI & EQUITY RELEASE ROAD SHOWS APRIL 2008 Regulation, regulation, regulation. Andrew Strange Senior Policy Analyst

  2. AGENDA • The mortgage market and demand for professional advice • Perceptions of equity release • The equity released market • Regulation: • UK • Europe • Key regulatory guidance and tips

  3. The Mortgage Market: 11m borrowers >6m transactions in 3 years >70% distributed through intermediaries Clear demand for professional advice THE MORTGAGE MARKET

  4. FSA FIGURES The UK residential mortgage market • 5.7m mortgage sales in PSD • • 92% of intermediary sales “advised” • • 40% of Direct sales had advice • Product Sales Data: • 72% of tracker products sold through intermediaries • 86% of Standard Variable Rates sold through lenders. • Cuts in BBR but not SVR? • Clear benefit to receiving professional advice Source: FSA, PSD 1st April 2005 to 30th September 2007

  5. PERCEPTION OF EQUITY RELEASE Areas to expand: AMI Census Results

  6. EQUITY RELEASE MARKET • 80% of Lifetime Mortgages sold via intermediaries • 2005: £1,168m • 2006: £1,213m • 2007: £1,260m • If anything, the more complex the product the greater the need for advice • CML/SHIP Research

  7. Different consumer ‘profiles’: Those in need of income Those who desire extra income HNW – tax mitigation A broad range of potential clients Mortgage Advice? Financial Planning? Equity Release

  8. Comparative Strength of Market Lack of credit risk Innovative products and providers Net housing equity Increasing public debate and interest – pension reform, public social agenda Strong representation – AMI/AIFA, SHIP Equity Release

  9. Mortgage Effectiveness Review & NewMCOB? Thematic mystery shopping - 2005/6 Sale and Leaseback VAT TCF REGULATION - UK

  10. Mortgage Effectiveness Review Part II of the post-implementation review of MCOB Forms part of the broad review of MCOB Move to principles based regulation Assesses five outcomes Lifetime mortgages fair well! REGULATION - UK

  11. 1: Consumers shop around 2: Consumers don’t tend to understand the advice and information-only distinction 3: Consumers understand risks “In the quantitative research, 96% of the respondents who had spoken to a professional adviser did not reject their adviser’s recommendation and most purchased the recommended product.” Effectiveness Review - Outcomes

  12. Thematic work of 2005/6 is complete. Sale and Leaseback – a threat? VAT disparity of home reversions and lifetime mortgages. REGULATION - UK

  13. Mortgage Credit White Paper APR KFI Early repayment Access to credit data Lessons to learn? Or opportunities to teach? REGULATION - EUROPE

  14. Perception as high risk Underlying strength of regulation Suitability Fact-finding Interaction with State Benefits Dabblers TCF Key Regulatory Actions:

  15. TCF In terms of gathering Management Information (MI) to evidence TCF, how prepared is your firm?

  16. At last! We now know the answers to the question! TCFREGIME TOP TIPS! You will ‘fail’ without these • Management information must be collected and used • Some how MI must be tied into the 6 consumer outcomes • External Data must be collected and used on an ad hoc basis (FSA newsletters, media, AMI factsheets etc) • All members of staff must be able to talk a supervisor about the firms awareness of TCF • And finally - firms must seek external feedback on their MI

  17. External Feedback: Age profile Loan-to-value Lump-sum verses Drawdown Ask and document! Even if you don’t actually get! TCFREGIME

  18. OUR WORK With your help • On the front foot • The champion of the profession • Regulatory campaigning • Political lobbying • European lobbying • Media • Consumerists • Reputation • Service standards • Events and help • Conferences • Seminars • Helpline • Fact sheets • Get involved, get elected!

  19. Association of Mortgage Intermediaries Our website: WWW.A-M-I.ORG.UK

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