by Alan Malik, Managing Director, Exasoft

Alan Malik, Managing Director, Exasoft

The growing compliance issues for independent advisers seem to have no end! First life assurance products and now mortgages have moved into the spotlight. Recently quoted figures have estimated an additional 36,000 staff will be required to handle the endowment complaints alone, never mind the forthcoming mortgage regulation. It may therefore be of little comfort to know that it isn’t just IFAs that are struggling to handle the changes in legislation.

But even with all the forms and documentation explaining things, at the end of the day the English language is complicated, and consumers will still complain in times to come that they didn’t understand what the seller was telling them. APR is a classic example of this and now we have AER. Most companies have problems calculating these so what chance does the public have?

The Key Facts Illustration has become a bit of a hot potato for many software suppliers as no one ultimately wants to be responsible if the wrong figures are quoted, and to be honest, with the FSA specifying a 1% or £1 per month error rate you can see why. Just where the ultimate responsibility will lie is yet to be seen as many current offerings advise consumers to get a KFI direct from the lender, hardly a solution. Most software companies avoid being FSA registered so it is the company using the software that will ultimately be accountable to the FSA, although all software offerings should carry a level of indemnity for IFAs.

Exasoft has already contacted the vast majority of major lenders in the UK in the hope that they can provide a reliable source of KFI for lenders and mortgage sourcing companies (ultimately IFAs). There are so many variables when it comes to handling mortgage quotations. These variations are already well catered for in Mortgage Fundamentals, this being a key requirement for mortgage and endowment calculations.

Compliance is now a vital part of the selling process for all companies and undocumented sales have come back to haunt many companies via the pension/endowment mis-selling claims, consequently eroding away much of the benefit of initial commission received. Many companies will (if they are not already doing it) be outsourcing much of the compliance role as this part of the business doesn’t generate any revenue but is essential to all companies.

So who benefits from all this extra regulation? Ultimately you would have to say the client but outsourcers have grown substantially within the UK and many are now setting up alliances or offices in other countries to handle the work. Many IFAs have already taken the plunge into endowment complaints, leaving behind the headaches of handling the endless legislation involved with selling products.

But all is not lost, software companies like Exasoft are always looking to help out and our recently introduced web-based endowments complaints (www.exasoft.biz) is a prime example of that, allowing IFAs to do their own calculations without having to pay the high price charged by outsourcers.

Light at the end of the tunnel, we think so…

About Alan

Alan Malik, Managing Director of Exasoft. In London, having worked with many large banks and financial institutions (including Lehman Brothers – part of American Express, ABN Ambro, Barings, County NatWest, Credit Suisse, Dai-Ichi Kangyo and Cantor Fitzgerald), Alan has gained a wealth of experience. Whilst in the Midlands Alan has worked for AT&T, NatWest and 3i. Spending a great deal of time developing software for Exasoft, his big break came in 2002 when the Financial Ombudsman Service took a 5 year licence to use the Mortgage Fundamentals package (developed in 1994) for mortgage and endowment complaints. Alan has a very ‘hands-on’ management style whilst giving staff the opportunity to grow and diversify. Quick to spot and act on new opportunities, Alan and his team are proud of their achievements. “My managing style is to create a positive work environment through achievement, responsibility and reward”. Exasoft’s recent accolades have included recognition by Deloittes as the 3rd fastest growing IT company in the Midlands in 2002 and the 2nd second fastest growing IT company in the Midlands in 2003 (8th in the UK).