Independent Commission on Banking: Final Report - Overview and Building Society Commentary.

On 12 September 2011, the Independent Commission on Banking (the Commission) published its Final Report setting out the Commission's recommendation on reforms to improve stability and competition in UK banking. The Final Report follows the Interim Report which was published on 11 April 2011. This article aims to provide an overview of the headline recommendations contained in the Final Report which are likely to be of particular interest to building societies.

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Customer Relationship Management tools must be integrated

Customer Relationship Management (CRM) systems originated in the 90’s – since then the financial services sector has undergone considerable change, coupled with a major boom and bust that won’t have escaped the attention of the majority!

CRM technology was initially championed by providers as the solution that would provide major advantages to organisations big or small. Providing insight into the preferences and further sales potential of customers.

Today’s solutions have evolved considerably and can now provide a greater diversity of information gathering options coupled with enhanced capacity to analyse and forecast trends of customer behaviour. These capabilities have in part been achieved through the enablement of integration into other technical solutions in place within the user’s organisation and in some instances external to the user’s own infrastructure and operating architecture. Thus CRM has become ECRM, reflecting its transition to being an Enterprise solution. The previous CRM model with potential of isolation of data is now accepted as being disadvantageous.

These solutions can be majorly beneficial, however to derive full value organisations must ensure that all applicable solutions have the ability to seamlessly integrate across all platforms:- origination, servicing and even debt management….an interesting and very relevant question to ask solution suppliers.

For more information visit BancTec’s website: http://www.banctec.co.uk/.

The Prudential Regulation Authority and its approach to supervision

by Simon Morris, Partner, CMS Cameron McKenna

Building Societies are preparing for the demise of the FSA and the new regulatory regime. The Prudential Regulation Authority (PRA), which is to be a subsidiary of the Bank of England, will play a key role and will be responsible for the prudential supervision of all building societies.

The Government currently envisages putting the new regulatory architecture in place by the end of 2012. In the meantime the Bank of England and the FSA will continue with the detailed design of the PRA’s new operating framework. It will publish further detail on the PRA’s regulatory and supervisory processes, its strategic priorities and its business plan, ahead of the formal transfer of responsibilities.

The Financial Conduct Authority (FCA) will be responsible for the FSA’s current role as a conduct regulator and may eventually have a broader consumer credit role and may also have broader consumer credit responsibilities. It will also have a more explicit mission to promote competiton and choice.

The PRA’s approach to supervision is held out as being radically new. There is certainly a sharpening of focus in its Proactive Intervention Framework but it will follow many developments introduced by FSA in recent years.
 
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Guarding against fraud 

The economy is showing little sign of growth, as endorsed by the Bank of England’s lowering of its UK growth forecast.   This places increased pressure on our lending industry. Lenders are faced with finding the balance between attracting an increased portfolio, against avoiding the pitfalls of excessive financial exposure.

It is therefore important that there remains a strong degree of scrutiny on mortgage applications from process through to completion to guard against fraud. Be it from excessive earning declarations, to criminal organised fraud, via corrupt professionals.  

In order to assist lenders, Cobbetts LLP’s Fraud & Risk Services team have developed one of the first university accredited mortgage fraud courses which they will be delivering to lenders over a five day period.  The course will look at mortgage fraud cases and deal with how they could have been detected during the application process.  The course then provides detailed training to delegates on the investigation process, considering both criminal and civil issues, as well as guidance on money laundering issues when dealing with suspected mortgage fraud.  

The course is aimed at Risk and Audit Managers, Financial Crime Managers and Recoveries Managers at financial services. 

If you would like to register for details of the course please contact either Arun Chauhan or Mark Kenkre at Cobbetts LLP on 0845 404 2404.

Plus ça change ... who wants a Euromortage?!

In March this year the European Commission published its draft proposals for a Directive on “credit agreements relating to residential property” – in other words, a Directive on mortgages.

The draft proposal has two explicit objectives:

• First, to create an efficient and competitive single market for consumers, creditors and credit intermediaries with a high level of protection by fostering consumer confidence, customer mobility, cross-border activity of creditors and credit intermediaries, and a level playing field while respecting fundamental rights, particularly the right to the protection of personal data.

• Second, the proposal seeks to promote financial stability by ensuring that mortgage credit markets operate in a responsible manner.

These are ambitious aims and at first sight at least the second is entirely laudable.  They seek to support the analysis of how the credit crisis of 2008 arose and how best to correct the problems.  The debate continues at an international level as well as the 2011 political party conferences highlighting the divergent views in place.

This article examines the arguments surrounding the call for a single European market for mortgages and in whose interests - the consumer, the lender, and national government – the call is made.

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Helping members understand private survey options

The average private survey – which can cost as little as £200 – identifies works requiring circa £1,800 to rectify, yet 4 out of 5 purchasers still do not commission their own surveys. In 2010, BSA members provided 113,470 purchase loans - meaning nearly 91,000 recent mortgage customers of the mutual sector can expect to end up forking out more than they had bargained for.

e.surv’s research indicates this is due to a number of factors. Primarily, there is a common misunderstanding that the lender’s mortgage valuation will suffice. Additionally, groups who are in a position to recommend a survey, such as agents, brokers, conveyancers and perhaps even lenders, may not always proactively do so.  Typical problems that buyers need to be aware of include dampness, rotten timbers and roof defects which can cost anything from a few hundred pounds up to many thousands to rectify.  The risk is that problems go unnoticed and lead to much greater expenditure later on.

With renewed focus on private surveys in 2011 from consumer groups and the RICS, the mutual sector has the opportunity to lead the way in supporting this practice and offering its own customers best advice and demonstrable TCF compliance.

Visit e.surv's website for more information www.esurv.co.uk

Payment Services Regulations - D+1 Compliance

In 2009 the Payment Services Regulations came into force, but gave Payment Service Providers (PSPs) until 1 January 2012 to comply with D+1 timing for payments.

1 January 2012 is fast approaching.

So, what is D+1? – “D” is the business day on which the payer requests the payment to start and the payment order is deemed to have been received. “1” is the business day following “D”.

For example a Standing Order due on the 1st of the month must be debited from the payers account on the 1st or the next business day and be received in the beneficiary account no later than the following business day.

In the UK use of Bacs for submission of Standing Orders where the payer is debited on business day 1 and the beneficiary credited on business day 3 is non compliant.

An internet or telephone banking payment must be received by the beneficiary no later D+1.

 UK Payment schemes that are D+1 compliant are CHAPS and Faster Payments.

Faster Payments allows submissions 24/7/365. Access to Faster Payments can be as a direct member, through a handling bank or via Direct Corporate Access (DCA).

DCA is currently only sponsored by Barclays. A PSP must have an account with Barclays to enable use of the DCA submission channel.

UK Payments best practice guide lines can be found here.  For more information on solutions to support you with D+1, you can contact Dominic Coghlan at dominic.coghlan@tallgroup.co.uk.

The changing valuation landscape

Valunation is a leading provider of valuation fulfilment and panel management services to UK lenders, many of them within the Building Society community.  Our record of innovation and investment in the most up-to-date technology illustrates that we understand the importance of offering lenders quality as well as speed.

Understanding risk management is an integral part of the services Valunation provides.  So whether the role is one of panel management or providing valuation fulfilment, Valunation's flexible approach can genuinely address the changing requirements of your own business. Valunation is an integrated part of the Spicerhaart residential sales and a lettings group that also includes our Corporate Sales division. This highly experienced Asset Management team, based in Blackpool, and our LPA Receivership business, based in Colchester, work on thousands of cases each year with banks, building societies and other lending institutions managing their property portfolios from pre-possession through to sale, blending expertise and experience to deliver first class Asset Management.

For building societies, the Spicerhaart Group, through Valunation and Corporate Sales, offers a perfect tailored service founded upon a wealth of experience, expertise and the best technology in the business. We pride ourselves on our ability to think like a lender.

Read more about how Valunation has helped the Loughborough Building Society at www.valunation.com/casestudy.html

WIPIN to exhibit at the Annual Mortgage Seminar for a second year

We have been BSA Associates for nearly two years and we have found this invaluable in developing our understanding of the challenges and pressures of your sector. We are looking forward to meeting many of you at this year’s Annual Seminar Delivering Mortgage Policy and particularly hearing from the Housing Minister, Grant Shapps, on the latest initiatives shaping government policy. There is clearly a lot to do within the housing market especially relating to support for first time buyers. Like you, we see our association with this key customer group as the start of a potentially longstanding relationship which we invest in from day 1 to provide service excellence.

As authoritative data providers for the Law Society’s CON29DW Drainage and Water enquiry we are committed to contributing to the development of a home-buying process that is fit for purpose and protects consumers. We regard homebuyers as a customer for life not just for the provision of a CON29DW.

For the second year running we will be exhibiting at the Annual Seminar in London on 20 October. Do come and visit us on our stand. We look forward to seeing you there.

Contact: Suzi Ibbotson, WIPIN, 020 7344 1889 www.drainageandwater.co.uk