Equifinance has just funded our first fully MCD-compliant loan. To get to this point though we’ve been on a journey the last few months as we reviewed and implemented the MCD regulation and have looked closely at how it impacts our business model.
As we went through the review process it dawned on me that the new regulation provides second charge lenders with the freedom to lose some of the inefficiencies enforced upon them (and us) by the previous framework.
As we move from CCA to MCOB/MCD rules, the biggest surprise for us was the number of opportunities it presented to make positive efficiency improvements as we adjusted our business procedures and lending model.
Having now moved through the process of applying the new requirements, we were repeatedly asking ourselves why do we do that? Do we need to do that now?
By questioning all elements of our internal processes, which were formed out of the need to comply with the former prescriptive legislation, we discovered the new rules do appear to allow for more freedom to transact business, whilst at the same time protecting customer interests without putting them through unnecessary barriers to access products.
For example, is it true that we really only need to provide information and only get a mortgage deed signed on some cases in order to fund? That’s crazy, isn’t it? What about the consumer credit agreement that neatly detailed fees, charges in a single column? Doesn’t exist anymore…
Conversely we have found benefits in getting the Binding Offer Letter signed, even though it doesn’t need to be; we can speak with the customer earlier where they opt to sign quickly, fund earlier and transact efficiently.
And the new European Standardised Information Sheet (ESIS) seems to neatly capture all the key elements of the offer in one useful customer-friendly place.
We’ve also invested in the use of technology. This is now completely open for the business to explore and we are now thinking about the benefits of using technology to the full during the process. Watch this space.
With all these improvements we have been thinking – Would it really be possible to fund a regulated second charge mortgage within 48 hours from application to completion? There is a challenge that was simply not possible under CCA rules that is now clearly within the industry’s sights.
And it doesn’t stop there. Equifinance is finding that elements of the internal process that do remain are also fundamentally changing. For example, the traditional format of the lender’s ‘speak with’ call has certainly received a rethink. The format has gone from what was predominantly an audit call to ensure no one in the transaction had contacted the customer during consideration period and check information given was correct, to a “Pleased to inform you about your loan” call. There was even a moment where we questioned if it was needed at all, but we did feel this was a step too far (at the moment).
Tony Marshall is managing director of secured loan provider Equifinance