The impact of the Mortgage Market Review (MMR) on the branch advice process How to ensure that the in-branch advice process remains as engaging, interactive and robust as all other sales channels October 2013
Executive Summary The Mortgage Market Review (MMR), which comes into force in April 2014 after more than five years of consultation, will fundamentally change the way in which mortgages are sold. Because the vast majority of mortgages will now fall under an advised sales process, this will require lenders to follow a new set of rules very carefully, whether they are dealing with a client in-branch, over the telephone or via any other sales channel. Because these new regulations will apply to all new customers, as well as to existing customers, it will only be in rare cases 1 that customers can avoid participating in a fully advised sales process. As a result, even existing customers who reach the end of a fixed rate period or special term will now have to undergo a full advice process from a qualified mortgage adviser if they want to increase their borrowing or make a material change to their mortgage account. Lenders now have just a few months left to design, implement and test solutions that address these issues. Given this incredibly short timeframe, lenders will need to focus on these issues now or risk not being able to sell mortgages. These are tight deadlines and the Financial Conduct Authority (FCA) has stated that it will not be prepared to give extensions. The implication of not hitting the April 2014 deadline would be catastrophic for any lender, as it would severely damage a lender s turnover, margin, competitive position and reputation. Vizolution, the parent company of vscreen, a patented screen sharing for business solution, has carried out in-depth research of the MMR and how it will affect lenders, and has endeavoured to provide some of the solutions. Lenders now have just a few months left to design, implement and test solutions that address three key problems: Ensuring the in-branch advice process meets the requirements set out by the MMR Documenting and recording these interactions in order to prove compliance Minimising the cost of delivering advice This white paper is the second of three that will look in detail at the different issues facing lenders and present some of the solutions that they could implement. In particular, this paper will examine the repercussions that the MMR is likely to have on the in-branch advice process and will consider how lenders can use solutions like vscreen to address these issues and maintain compliance. This paper will also highlight some of the ways in which screen sharing for business could provide a simple, ready-made solution to these post-mmr challenges by enabling lenders to embed a robust, visual process that their advisers and customers can follow very easily, both in-branch and remotely. Not only will this visual element ensure much greater engagement with the customer, but it will also provide a robust audit trail to demonstrate compliance. 1 Existing customers will be exempt only if they wish to move to another property with no increase in borrowing or if they change to a mortgage they have selected with the same lender with no increase in borrowing or other material change. For new customers the exemptions are specified in footnote 2.
Introduction One of the key and far-reaching tenets of the Mortgage Market Review (MMR) is that except in rare cases 2 all post-mmr mortgage sales that involve spoken or other interactive dialogue will fall under an advised sales process. Many major lenders have concluded that the sales process must be advised if there is any conversation with the customer where information is imparted, no matter where it takes place. As such, it is important to note that this interactive dialogue does not refer only to phone and internet sales, but also to any communications initiated in-branch. Branch-based mortgage sales have all of the regulatory requirements but none of the safety nets of a telephony process. Where a telephony process usually has strong scripting, call recording and a strong infrastructure to review cases, the branch-based process typically has none of this. In many cases, the lender won t know in what order the documents were shown in a branch, or indeed if certain documents were shown to the customer at all. Nor will it know what the agent has said to the customer. This leaves the lender extremely exposed. The furor surrounding Payment Protection Insurance (PPI) illustrates the issues of having a process whereby advice is not robustly documented. In addition, lenders will not only need to find and/or train qualified advisers with a Certificate in Mortgage Advice & Practice (CeMAP), but will also need to make sure these advisers are easily accessible. This becomes a much more difficult proposition for the branch network where individual advisers are responsible for a number of branches. Another issue within branches is delivering advice in a cost-effective and efficient manner. s who would historically have undergone a 15-20 minute non-advised process will now be forced into a 90-120 minute advised process instead. For branches, this increase in the sale process means a reduction in the number of customers that can be seen by existing advisers. Branch customers will also need to remain engaged throughout what is estimated to be a 400% increase in the sales process. Current situation Direct Sales 48% advised Source: FSA 3 Our prediction Direct Sales 10% Non-advised Source: Vizolution 48% advised sales 90% advised sales 52% Non advised 90% Advised Key issues for lenders regarding the customer experience How can a lender prove that the process followed by an in-branch adviser was compliant? How can lenders train and qualify enough branch staff? How can lenders ensure that a qualified adviser is on-hand to serve customers every time? How can lenders minimise the cost of delivering advice in a branch? How can lenders make advice in branches engaging and accessible? [The MMR] will probably be the largest seismic shift in mortgage regulation ever. Robert Sinclair, chief executive, the Association of Mortgage Intermediaries 2 The only exceptions will be Proven High Net Worth individuals, mortgage professional and customers needing loans for business purposes. MCOB 4.9 3 Mortgages, Product Sales Data (PSD) Trend Report 2005-2012, August 2012 http://www.fsa.gov.uk/static/pubs/other/psd-mortgages-2012.pdf
100 80 60 40 20 0 White Paper The visual solution for the branch advice process The only way for an adviser to navigate the new, complex and lengthy advice process with the customer is through the use of tools that keep the customer engaged, yet without sacrificing compliance with new MMR rules. Adding a visual element to the sales process ensures much greater engagement with the customer, as the adviser is able to use images, calculators, illustrations and diagrams to make the sales process both interesting and entertaining, whilst also maintaining a detailed record of these interactions for compliance purposes. Visual solutions such as vscreen also give lenders the ability to make the sales process much more personal to the customer. As a result, customers actually enjoy their vscreen sessions, with more than 95% of participants typically ranking their experience as excellent or good. Lenders can use vscreen to ensure they are compliant with all aspects of MMR regulations, including new rules on advised sales, proof of affordability, collection of documents from customers, branch advice and arrears management. After these new rules take effect, the impact of tools like vscreen will be even more pronounced, since the alternative would be a two-hour meeting with no images, rather than an engaging visual experience that includes calculators, slides, documents and more. Visual aids can include a graphical illustration of what portability means, as well as comparisons between fixed rate and variable rate mortgages, what a flexible mortgage is, the impact of early repayments and so on. These aids can also show the customer the impact that certain mortgage features will have, such as overpayments, off-set mortgages, term of mortgage and so on. This way, the customer can read and digest information during the vscreen session with the adviser, and can then submit any documents and supporting information in order to complete the transaction, either in-branch or later, from home. This will not only reduce the time of interaction but also reduce the elapsed time for the transaction. This approach has already increased sales ratios by up to 40% in a trial with one major lender. Presenter Presenter screen device Increased Effectiveness +43% No visuals Presenters who use visual aids are 43% more effective in persuading audience members to take a desired course of action than presenters who don t use visuals. Source: University of Minnesota Shorter meetings With Visuals Senses Human eyes represent 70% of all sense receptors in the body. Source: Campbell Biology No visuals 26.7 Minutes With Visuals 18.6 Minutes +43% 26.8% Quicker The average length of meetings in which visuals were used were 26.8% shorter than meetings in which no visuals were used. Source: University of Minnesota Greater Retention 128-bit security encryption No visuals 10% Retention 10% 65% over 6x With Visuals 65% Retention over 6x Crucially for a lender s bottom line, advisers can remove breaks from the sales process by using vscreen to send and receive documents instantly and securely via the internet or through web-enabled kiosks located in the branch. Adding a visual increases retention of information over six fold, from 10% to 65%. Source: U.S. Department of Labor
The vscreen solution for the branch advice process vscreen can be used during every mortgage process advised, non-advised, current account mortgages and in-branch. In-branch advisers can use vscreen in a face-to-face format to ensure that they consistently follow a compliant sales process with the customer, as they have the benefit of a fully scripted process that is also fully documented. The use of web enabled kiosks or customer accessible PCs in-branch can make this process even easier, as customers can receive professional advice in an instant, both visually and verbally, from a remote location effectively providing lenders with an expert in every branch. Through the use of electronic signatures, customers can even click an I accept button to form a binding contract and print out the agreement on the spot. Lenders will also benefit from an extremely robust audit trail, as every action is automatically captured, including each image sent, each file transferred and every electronic signature. Better still, this audit trail is securely stored and cannot be altered or erased. The adviser and customer can use desktops, laptops, ipad/tablets, kiosks and smart phones to conduct the mortgage transaction, which means that customers can have their requirements dealt with immediately, rather than having to book an appointment or contact a call centre when they get home. Remote Adviser Support A single adviser (in this example within a branch) can support customers in their own branch face to face and other branches or telephone customers remotely. Branch A Adviser Also, because vscreen is a location-agnostic tool, it allows an adviser to serve a remote customer quickly, easily and compliantly. For example, by using a hub and spoke model, it is possible for an adviser in branch A to serve a customer in branch B remotely using vscreen. As such, this reduces the under-utilisation of advisers, which is often caused by the need to travel between branches. A logical extension of this hub and spoke model would be to extend it to incorporate the call centre based CeMAP advisers as well. This would allow a CeMAP qualified adviser in a call centre to serve a customer in a branch, providing a better service to the customer while also improving utilisation of qualified agents. Face to face Remote using vscreen Telephone CeMAP Advisers (Branch or Call Centre based) Branch Branch A Remote using vscreen Internet Mobile Branch B Hub and Spoke Model Telephone This concept could also be extended in reverse whereby branch-based CeMAP advisers could be used to serve telephony-based customers. This way, the lender would be able to pool all its CeMAP resources to serve the customer and maximise the utilisation of its valuable adviser pool, thereby reducing the cost of additional staffing, travel expenses, and training.
Advantages of vscreen vscreen is the market leading, financial services focused, screen sharing for business technology that allows an adviser to remotely share visual information with a customer on a real-time basis during an advice session. Its unique design ensures vscreen works first time, every time, for all customers. It has proven success in improving sales conversion, customer satisfaction and compliance. avscreen is easy to implement as unlike branch-based video solutions it does not require a major IT or infrastructure project. vscreen can use existing computers / ipads and existing branch internet connectivity. Average customer satisfaction avscreen is a universal system. It works first time, every time, across all platforms, operating systems, browsers and mobile devices. vscreen also works with all firewalls and has worked with major UK financial services companies. avscreen allows secure file transfers between agents and customers. avscreen offers the facility for fully compliant electronic signatures. avscreen has the ability to present customers with electronic forms, calculators, surveys, etc. avscreen is a totally secure system vscreen only shows customers what the adviser wants them to see, rather than showing all activity on the adviser s desktop. avscreen has the ability to pre-prepare standard materials so that advisers only deliver approved materials. avscreen generates an automatic audit trail from each session. Case study: 3 top-5 UK banks Increase in conversion rate with vscreen Bank A +42% Bank B +47% Bank C +45% Conclusion This white paper has highlighted one of the many challenges that lenders will face following the introduction of the MMR, since branch-based mortgage sales currently have all of the regulatory requirements but none of the safety nets of a telephony process. Where a telephony process usually has strong scripting, call recording and a strong infrastructure to review cases, the branch-based process typically has none of this. In this paper we have shown that the use of a scripted, highly visual interaction can improve the customer experience while at the same time mitigating the increased time that the process is set to take. The use of screen sharing for business improves sales conversion rates as the customer is more engaged in the process and unnecessary breaks, such as waiting for documents to be posted, are removed. Using a screen sharing for business solution such as vscreen offers genuine and instant benefits to lenders adapting to new MMR regulations. MMR White papers from Vizolution: How technology can mitigate negative reaction to a significantly lengthened buying process Managing the In-Branch Process Creating a Robust Audit Trail: How to evidence that post-mmr mortgage sales are compliant These white papers and other information regarding vscreen can be found at www.vizolution.co.uk