Hector Sants, the new FSA CEO, presented at last Wednesday’s AIFA dinner – it was his first time at an AIFA event, having only been appointed in July of this year, promoted from his previous role of Managing Director, Wholesale and Institutional Markets.

There were a few nuggets in his address – the first, was around the Retail Distribution Review (RDR) – a subject about which AIFA has been particularly vocal. Mr Sants acknowledged the discussion paper had triggered some negativity and that the FSA had attracted criticism for being potentially anti the IFA. He denied that accusation, stating the FSA were fully supportive of a sector that drives over 60 percent of the advice market in the UK. I think, the RDR discussions will be running for some time to come, but there seems little doubt about the determination of the FSA to alter the distribution landscape and the access to advice by the consumer.

Moving on to Treating Customers Fairly (TCF), I have seen throughout my travels to the trade shows this year an ever increasing emphasis by the FSA on this topic. As an integral part of the change to the overall regime to become principles-based, TCF forms the backbone of the way in which firms deal with client. Mr Sants re-iterated the FSA stance on this and, indeed, outlined a significant increase in the amount of supervision of smaller firms – he announced an increase of about 25 percent on the number of inspection visits to smaller firms to ensure the new TCF rules are being effectively enforced.

I expect to read about a few more ‘naming and shaming’ exercises hitting the streets soon, especially within the Mortgage sector, where there has been an inexorable increase of supervisory attention given to firms; judging by the content of Hector Sants’ presentation, there will be no escape.

I visited Mortgage Expo last week which was an interesting, if somewhat exhausting day out!  One thing I found fascinating was the number of Point of Sale systems now available to mortgage brokers.  Crystal, arguably the leading mortgage point of sale package over the last few years, has enhanced their solution providing a more complete front and back office capability by adding improved case management and workflow capability to  produce a competitive market offering.  However, these enhancements, , were clearly needed to keep the new range of suppliers at bay.  Focus launched their solution, ‘360’, earlier in this month, while 1^st Software launched theirs the night before the Expo.  Both of these companies have formidable track records in providing sales solutions to IFAs and mortgage brokers which mean their new offerings need to be taken seriously.  Companies like N4 and Distribution Technology are also increasingly active in this market with their ability to deliver large corporate POS systems.

The leading sourcing systems of MBL and Trigold have expanded their offerings with the acquisitions of The Key and Dashboard respectively, both are seeking to provide cost effective alternatives for those who can’t afford the higher price points of some of the traditional suppliers.   Companies traditionally more associated with the IFA marketplace also continue to have success in the provision of back office systems to the mortgage market, with the likes of Bluecoat, Plum, IntelliFlo, True Potential and Quay all having credible offerings to the mortgage market.  While mortgage specialist back office suppliers like Mortgage Stream, Mortgage Keeper and Casepro are not only defending market share but continuing to grow.  Add to this newer entrants like Solution4, who have expanded their back office capability to move into the front office and you have an increasingly crowded market. The high level of supply has been driven by an active market that is increasingly responding to regulatory pressure and the need to set and control standards with technology.   However, this level of supply is surely neither sustainable nor desirable.  Who will survive?  Well, having now met most of the existing and new suppliers in the last couple of months, I think winners and losers can begin to be identified already.  Some will survive in a niche with a small cost base, others will invest heavily to gain market share.  However those in the middle, and there are quite a few, will struggle unless they quickly get critical market share through a few big deals, or look to consolidate. 

Point of sales systems in use today typically fall into one of two camps: A comprehensive advice tool or a streamlined retail system. These latter systems are tuned to ensure the fast transaction of business, typically in response to a single need area such as mortgage protection.  In short these systems are about maximising efficiency.  The advice led systems are typically far more complex and address the whole financial eco-system of a client.  They will aim to increase the number of products sold and to improve the case size of.  They are in effect focused on effectiveness but their complexity often leads to a poor uptake and slows down the sales process and therefore their efficiency is often poor.

However this traditional split is now beginning to change as the systems converge.  Retail systems are adding more functionality and rigour and becoming more holistic in their approach.  The Advice led systems are streamlining their approaches and using usability techniques to increase their uptake. 

The two approaches will lessen their deficiencies they will never merger completely and in selecting a system the distributor will do well to remember where the suppliers have come from and to match the origins of the supplier to their own needs and requirements.