Dealing with the unexpected is a crucial part of running any business and over the course of the last 10-15 years, any firm working in the mortgage sector will have had to deal with their fair share of surprises in business.
From the Credit Crunch to the recession that followed, from the Brexit referendum through to more specific industry developments like the MMR and now the regulator’s support for execution-only, we have had no shortage of market-changing issues and economic scenarios which require change, adaptation and solutions.
Now, of course, we find ourselves having to deal with an altogether different challenge – one that doesn’t necessarily ‘target’ our sector but has much more wide-reaching and potentially hazardous repercussions for all of us. I am of course talking about the coronavirus (Covid–19) and the impact it is already having, not just from a mortgage industry perspective, but for our society as a whole.
It’s hard to know just how the spread of the coronavirus will ultimately impact on the UK mortgage market specifically but, as in other sectors, if large numbers of people (perhaps even cities themselves) are quarantined away from work or social congregation constrained, then there is undoubtedly going to be some impact.
Just how likely this might be is a question that can’t yet be answered. The numbers of those being tested positive with the virus continue to go up – currently over 1,500 – as do the number of deaths of individuals who had the virus. We have to presume that we are some way away from the peak and that there are likely to be some profound societal changes about to put into effect.
It’s therefore vitally important that all advisory firms have plans in place they can draw on, should they be required. The FCA has already warned advice firms that there will be a level of impact from the virus and the sector should consider contingency arrangements.
While not necessarily a coronavirus-specific warning from the FCA, but one for dealing with ‘major events’, this will mean (amongst other things) ensuring staff can work from home, providing client access to staff if they are not working from their normal office, ensuring technology and security is maintained at non-office locations particularly around the back-up of information and the like, and overall continuing to ensure the business functions even if a number of staff are not physically ‘at work’.
The good news of course is that for the provision of regulated advice, there is no pre-requisite to meet with clients face-to-face. All aspects of the client contact process can be conducted by phone and e-mail. Technology already enables the mortgage process to continue even if, for example, large numbers of lenders’ staff are required to work remotely. In fact, many already do.
Many mortgage advisers also work from home or small, serviced offices already, and don’t rely on high-street footfall, while significant amounts of business are naturally provided by phone or e-mail, and don’t require face-to-face engagement with clients. If necessary, I anticipate that advisory firms could even up the proportion of sales they can transact without personal meetings.
I fully expect similar business continuity plans to be put in place right across the industry, whether it’s advisers, packagers, surveyors, lenders or conveyancer, then it’s perfectly possible to ensure that the client service continues and that customers progress and complete transactions.
What the impact of the virus might be in a wider sense is also up for debate. Mark Carney has warned of the potential for a ‘large economic shock’ but suggests this will be temporary and the Bank of England has clearly moved around to provide confidence to the market and ensure a flow of lending. The decision to cut BBR at an emergency MPC meeting and the co-ordinated approach by a number of countries’ Central Banks is also evidence of this.
These of course are still very early days and even given the likelihood being that ‘it will get worse before it gets better’ as Boris Johnson said recently, with the right plans in place and the resilient nature of the mortgage market, we must all hope that the mortgage advice sector proves yet again that it can cope with just about anything that is thrown at it.