Touted as a successful expansion of the FSA's powers, mortgage regulation is being seen on the ground as leading to real and heavy cost implications for lenders and brokers, suggest results from two recent surveys.
Marlborough Stirling, the provider of software and IT solutions to intermediaries, says lenders have spent around £345m preparing for mortgage regulation.
Based on a survey of delegates at the Council of Mortgage Lenders’ annual conference, the results suggest an average spend of £2.3m.
Some 30% of respondents say they have spent more than £4m, with many suggesting this merely marks the beginning of increased spend on maintaining compliance with the new rules.
All respondents state they believe further regulation of the mortgage sector will enforce improvements to lenders’ systems.
Brokers too are complaining about the costs, according to a survey published by Alliance & Leicester.
Based on responses to telephone calls to 59 brokers, the lender says nearly half – 45% - report the mortgage sales process takes two hours longer to complete than before regulation.
Some 44% report their profits have decreased since mortgage regulation came into effect last year.
As a result, some 47% say they have had to look to increase turnover to achieve the same profits gained pre-M Day.
As to the benefits of regulation, around half those surveyed say KFIs provide no real benefit to consumers, whereas a quarter state these documents have been beneficial to their customers.
A&L itself concludes it is too early to tell what effects there are on profitability from the new regulations.
Marlborough Stirling says its findings suggest lenders have benefitted from regulation in that their systems have been improved.
However, this level of improvement has not been applied universally across the industry, meaning lenders must remain on their toes and maintain expectations of further demands for systems improvements.IFAonline
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