Technology ‘critical’ in era of heightened scrutiny

Speaking to Mortgage Business, NextGen.Net director of sales Tony Carn said one area where technology can facilitate compliance is through the traceability of mortgages.

“I think that from a compliance and regulatory point of view, technology is absolutely critical at the moment. I think the role that aggregators now play in offering a strong value proposition to their member base is more important than ever through compliance and regulation,” Mr Carn said.

“It is around the traceability of compliance throughout the entire ecosystem of mortgages platforms.”

Mr Carn said that a broker’s needs analysis – which captures the requirements and objectives of a customer – must be consistent with what is captured at a CRM level, through ApplyOnline and the information received by the lender.

However, he noted that some banks may face challenges when a broker makes changes to a loan application. For example, a client may miss out on a property at auction and need to change their loan product or amount borrowed.

“Lots of things can change from the time an application is submitted and when it has settled. When a broker changes a loan application in flight, that information needs to be readily accessible by all parties that need to be aware of it from a compliance point of view,” Mr Carn said.

“The challenge for banks is how they facilitate the electronic resubmissions of applications every time a change happens. A lot of them can do it. A lot of them know they need to do it, and a lot of them haven’t even realised that they need to be able to do it going forward.

“That is just one example where compliance and regulation will be greatly assisted by technology going forward, to not only make sure that our industry is compliant but that it also has traceability, auditability and secure storage of files.”

Meanwhile, aggregators are under increasing pressure to ensure they can track applications and monitor potential risks.

Yellow Brick Road recently revealed that it has been examining data from lenders as well as its own finance team in an effort to flag potential issues ahead of time.

“We get data from our shadow-shopping work, we get data from our audit work, we get data from our finance team. Now we will be receiving additional data from the lenders,” YBR chief risk officer Sean Preece told Mortgage Business.

“It all goes into effectively building a profile on an individual broker. The supervision and monitoring is about risk management. There are people who are more likely to present risk and profiling those people by using that data enables us to focus our efforts and attention on those people who potentially present the most risk to us.”

The data being collected covers different facets of the mortgage application and is used to identify, among other trends, those brokers using HEM or less to calculate client living expenses, as well as certain characteristics of applicants, such as those living with their parents and not paying rent.

“There might be reasons for some anomalies, but typically when you see consistency in alarms, it usually presents as a reason for us to make further inquiries,” Mr Preece said.

[Related: Commercial loans become digitised]