It would have been impossible to ride out the credit crunch storm, not to mention countless regulatory changes and reviews, if mortgage brokers weren’t completely dedicated to their industry and the consumers they supply with vital advice.
However, while an admirable trait, this loyalty and commitment can also mean they’re prone to stick with what they know rather than make changes.
Perhaps this is understandable; with so much change out of their control including the implementation of the Mortgage Market Review and Mortgage Credit Directive, why would one inflict further change on themselves when there is no real need to?
It is for this reason, I believe, that a lot of brokers choose to stick with networks and, indeed, with appointed representative status even when it might not be the best option for them.
The network model has been in the spotlight quite a bit of late.
First we had the news that one network in particular – Pink Home Loans - was planning on changing its fee structure to ensure those brokers who don’t do much business pay a higher fee than those brokers that do.
The idea, said Pink was to protect the hardworking brokers and make sure they are not stuck carrying the so-called part-timers.
Around the same time as this announcement came the news that Leeds Building Society was to start paying directly authorised individuals the same procuration fee as ARs.
And, in recent days the FCA, in its report ‘Embedding the Mortgage Market Review: Advice and Distribution’, criticised the advice given by appointed representatives for delivering advice with little or no structure, laying the blame firmly on the ‘limited oversight and controls at many of the networks’.
It seems only natural then that brokers should start viewing networks, and the benefits they provide, differentlyIt seems only natural then that brokers should start viewing networks, and the benefits they provide, differently.
For many years brokers have held the misconceived notion that the inflated procuration fee received via AR status means the network model is financially more appealing than being a DA.
Of course, when network fees and the like were considered it was often the case that this wasn’t entirely true however the move by Pink and the announcement by Leeds will surely put brokers straight on any perceived monetary benefits.
Furthermore, the FCA’s report may make AR brokers question the support they receive.
Don’t get me wrong, networks offer a great deal to their members from a compliance and assistance point of view and I’m sure this model does suit many brokers.
But for those advisers who are perhaps sticking with the network model because they think it pays better or they’re afraid of going it alone, it is important they see there are other options available.
Mortgage clubs can offer the same sort of compliance advice and assistance that networks do, coupled with the freedom of running your own business on your own terms.
There is also a whole host of help available throughout the sector from lenders, compliance specialists and, in terms of research material provided, the press.
Loyalty is a great quality but if it’s not benefiting you or your business, perhaps it is time to question your allegiances?
Phil Whitehouse, managing director of MCI Mortgage Club
