At AT8 we have been working with a company, Verifi Solutions, who is launching a solution to bring forward in the mortgage sales cycle the credit checking of clients. With the FSA scrutinising the mortgage sales process closer and closer, having better information on the clients’ credit position earlier in the sales process makes perfect sense.
The problem is who will pay for the credit check? When done late on in the sales process the lender pays but here the lender isn’t yet identified – will clients or brokers pay?
If the business model is right I believe they will as the benefits will be considerable for both parties.
First, if the broker can pre qualify the business before it is sent to the lender then they will be presenting business that is cheaper to process and will be well within their rights to negotiate higher proc fees.
Second, speed is always of the essence in the mortgage market both for the client who wants to complete on a purchase and the broker who wants to be paid. Avoiding applications being bounced from inappropriate products being applied for surely is a substantial benefit.
Third, if brokers are to move more and more to a fee based model then they need to be able to demonstrate value in the way that financial planners do when they produce detailed financial plans. Quite simply handing over a KFI doesn’t cut it. A report analysising their credit worthiness however begins to build such value.
Additionally the service improvement to the client from being able to recommend knowledgably the right product based on the client’s true circumstances must be worth a great deal. Added to this the fact that the right product can be recommended up front with greater certainty than the rate quoted will be honoured and the dubious practice of scheme cascading will be avoided, should delight both the FSA and the client.
Last but not least is the proof to the regulators that every effort has been made to address the exact requirements of the client and hence avoiding the wrath of the FSA whom many commentators believe will start hitting the mortgage market hard unless standards improve.
Work needs to be done by Verifi to add other services and analytical tools around the credit check area to help the adviser maximise the benefits from the data made available but does the business case stack up for accessing more data earlier in the sales process – you bet it does!
