Is 2014 the year of outsourcing? Demonstrating compliance in a post-MMR market

25 February 2014

In 2014, lenders will be under greater pressure to ensure and prove that the appropriate mortgage advice has been given to clients, they comply with treating customers fairly principles and the necessary qualifications are in place. Just how are they going to do this effectively on an ongoing and continuously updated basis?

In many cases, outsourced skills will be necessary to ensure companies can offer a fully compliant advisory service. In others, technology will be needed so that companies can themselves streamline processes and demonstrate compliance in a simple and effective way.

Here Chris Thompson, CEO at Capita Mortgage Software Solutions, discusses the challenges faced by lenders as they move into the post-MMR market and how these can be overcome through technology and forward planning.

There are a number of challenges that lenders can expect to experience as MMR takes hold in April 2014. Firstly, the regulator will be looking to lenders to demonstrate that they are complying with new requirements. This has potential to increase the administrative burden on service providers, restricting their ability to focus on delivering effective customer service and so impacting the customer experience. We anticipate that many will look to technology to ease this process.

Loan origination and administration systems will play a key role in improving the customer journey. Such platforms can be highly automated to drive efficiencies and regulatory adherence across all types of business including prime, near-prime, sub-prime, buy-to-let and lifetime mortgages.

In order to meet quality assurance checks and be accountable to the FCA, it is important that each customer case is traceable throughout the advice process and clear record keeping is therefore paramount. While some customers have the choice between execution-only or advised channels at the loan origination stage, others will take the advised route. Technology can allow a lender to see whether the customer has previously accessed one of these services, which can bring useful insight to a business. For example, if a lender can see that advice is frequently rejected by customers, it may wish to put a further focus on skill development within the organisation to ensure that as many cases as possible are converted into advised sales.