1. The Mortgage Event 2005 The Mortgage Event Vision of the Future Tim Dawson Chairman IMLA

2. The Mortgage Event 2005 Vision of the Future Content –Regulation –e-commerce –Niche Lending

3. The Mortgage Event 2005 Role of FSA The FSA has four statutory objectives:  market confidence: maintaining confidence in the financial system;  public awareness: promoting public understanding of the financial system;  consumer protection: securing the appropriate degree of protection for consumers; and  the reduction of financial crime: reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime. With the aim:  To promote efficient, orderly and fair markets and to help retail consumers achieve a fair deal. Source: FSA Website - What we do

4. The Mortgage Event 2005 Objectives of Mortgage Regulation To enhance consumer protection in two key ways: 1. Improvements to information about mortgages made available to borrowers, achieved through: –rules on financial promotions, designed to create high standards in product transparency –pre and post sale disclosure documents, to enable consumers to acquire clear information specific to their circumstances and in a standard comparable format –provision of comparative information and consumer education to help in the early stages of shopping around, and to raise understanding of mortgage products –measures to improve information provided to those facing arrears and repossession Source: FSA website - Mortgage Regulation

5. The Mortgage Event 2005 Objectives of Mortgage Regulation (2) 2. Mortgage lenders need to be authorised by the FSA and to meet the following high level standards: –Threshold Conditions set out in the Financial Services and Markets Act (FSMA) –senior management responsibilities –systems and controls Source: FSA website - Mortgage Regulation

6. The Mortgage Event 2005 Mortgage Regulation Has Mortgage regulation achieved these objectives?

7. The Mortgage Event 2005 Cost Effective ?  40% of Intermediaries costs increased by 10%  21% of Intermediaries costs increased by 20%  Costs to implement MCOB  £200m  MCOB annual running costs £75m - £150m

8. The Mortgage Event 2005 Better Decision Making ?  86% IMLA members think KFI not helped or made little difference.  60% Intermediaries think clients don’t understand KFI  70% Intermediaries don’t think clients use KFI’s to compare products

9. The Mortgage Event 2005 Better Decision making ?  68% of Intermediaries don’t believe clients get better advice post Mortgage Regulation  72% of Intermediaries don’t believe clients benefit from Mortgage Regulation

10. The Mortgage Event 2005 Objectives of Mortgage Regulation Improvements to information about mortgages made available to borrowers, achieved through: –Financial promotions? –Enable consumers to acquire clear information specific to their circumstances and in a standard comparable format? –Help consumers shop around NO –Improve information provided to those facing arrears and repossession ? Cost effectiveNO

11. The Mortgage Event 2005 MCOB Impact on Market Structure More DR’s than expected Few networks disappeared Shortage of AR’s No clear sign of market shake out yet

12. The Mortgage Event 2005 The Future FSA Plans: –Cost benefit review - 2006 –Review of KFI - 2006 –TCF

13. The Mortgage Event 2005 The Future What the market would like: –Review of MCOB –Simplify regulation –Reduce cost –Involve / work with the industry

14. The Mortgage Event 2005 E - Commerce

15. The Mortgage Event 2005 E - commerce business levels

16. The Mortgage Event 2005 Online Growth Average online business:  Now38%  In one year47%  In 5 years80% ?

17. The Mortgage Event 2005 Niche Lending

18. The Mortgage Event 2005 Niche Lending - Current Intermediaries think niche lending is:  Extremely / very important45%  Quite important35% ____ “ Important ” 80%

19. The Mortgage Event 2005 Niche Lending - Future Intermediaries think:  Much / a little more important64%  Less important 3%

20. The Mortgage Event 2005 Niche lending - Products Current importance of individual markets:  Self Cert21%  Buy to Let13%  Sub prime11%  100% 6%  Equity Release 6%

21. The Mortgage Event 2005 Niche Markets - Growth Growth of Individual markets: Equity Release+6% pa Self Cert+5% pa Sub prime+5% pa Buy to Let+3% pa

22. The Mortgage Event 2005 Niche Lending - Importance

23. The Mortgage Event 2005 Niche Markets - Conclusion  Equity Release will become a major market  Self Cert will remain important  Buy to Let much less important

24. The Mortgage Event 2005 Q & A’s End and Thank you