1. COUNCIL of MORTGAGE LENDERS 1 The Mortgage Event 13 October 2005 A Vision of the Future Presentation by Michael Coogan, Director General of the Council of Mortgage Lenders

2. COUNCIL of MORTGAGE LENDERS 2 The Mortgage Event 2005 Introduction Market prospects Impact of Labour Government Impact of Statutory Regulation/TCF Business threats and opportunities Conclusions

3. COUNCIL of MORTGAGE LENDERS 3 The Mortgage Event 2005 Market prospects – current forecasts

4. COUNCIL of MORTGAGE LENDERS 4 The Mortgage Event 2005 Market prospects – equity buffer Value of housing stock, annual

5. COUNCIL of MORTGAGE LENDERS 5 The Mortgage Event 2005 Impact of Labour Government Low inflation and low interest rates Low unemployment Extending home ownership publication – promoting confidence First-time buyers and shared equity – targeted support in the future

6. COUNCIL of MORTGAGE LENDERS 6 The Mortgage Event 2005 Impact of Labour Government Promoting an asset-owning democracy – more tax cuts needed? Home buying and selling (home information packs) – market efficiency? Higher taxes to pay for public sector commitments?

7. COUNCIL of MORTGAGE LENDERS 7 The Mortgage Event 2005 Impact of mortgage regulation Costs of transition (£180m in 2003/4) Longer mortgage interviews (+ half hour) Long disclosure documents (5-10 pages) No increase in shopping around or complaints  A sledgehammer to crack a nut?

8. COUNCIL of MORTGAGE LENDERS 8 The Mortgage Event 2005 Treating Customers Fairly TCF campaign has significant resources in FSA Business Plan (2005 and onwards) Wide-ranging focus including financial promotion, sales process through to complaints handling arrangements FSA ‘guidance’ on principles not detailed rules and public consultation ‘Fairness’ means different things to different audiences –firms, FSA, FOS, media, customers

9. COUNCIL of MORTGAGE LENDERS 9 The Mortgage Event 2005 TCF – the Business Risks Regulatory uncertainty, arbitrage and retrospective interpretation of what is “fair” Costs of compliance “creeping” Reputational risk of being seen as “unfair” Developing effective management information and demonstrating compliant procedures (“record keeping”)

10. COUNCIL of MORTGAGE LENDERS 10 The Mortgage Event 2005 TCF – The Business Opportunities Enhanced reputation for some firms compared to competitors Improved customer retention and less churn, but will fairness or price be key? Deeper customer relationships – more sales to offset compliance costs? Improved profits?

11. COUNCIL of MORTGAGE LENDERS 11 The Mortgage Event 2005 Business threats and opportunities Slow down (stagnation or crash?) Consolidation (intermediary or lender led?) Intervention from Europe (more costs, any opportunities?) New products (self-certification, specialist loans, FTBs, lifetime mortgages, etc) Technology (e-mortgages, e-conveyancing – a paperless office?)

12. COUNCIL of MORTGAGE LENDERS 12 The Mortgage Event 2005 Conclusions Home ownership will remain popular despite lower house prices Market slowdown from record year in 2004 has been managed well Transition to full compliance with statutory regulation still to be completed

13. COUNCIL of MORTGAGE LENDERS 13 The Mortgage Event 2005 Conclusions Competition between firms will remain strong Is your strategy to survive or thrive? CML Annual Conference intermediary session on 6 December 2005 may help!