Mortgage advice firm Embrace Financial Services has placed some brokers at risk of redundancy as the firm looks to restructure to boost its financial performance.
Embrace is owned by LSL, the parent firm of mortgage advice network Primis, which recently sold off two of its other mortgage broker firms - Group First and RSC - to its new private equity backed venture.
Yesterday morning (February 15), Embrace communicated the cuts and imminent restructure to employees.
FTAdviser understands there was a company-wide Zoom call, on which some staff were told they were safe, while some were told they could be made redundant.
A spokesperson for Embrace told FTAdviser: “We’ve reviewed our business model and, as a result, are making some structural changes.
“These changes will put us in a better position to meet our customer needs, maximise opportunities for our advisers and introducers and improve our financial performance.”
“Regrettably some colleagues are being placed at risk of redundancy and are entering a consultation process as a result of the restructure, but we are working with those affected to identify alternative opportunities within the group, the Primis mortgage network and TMA mortgage club.”
The firm confirmed that some employees whose jobs are at risk are brokers.
According to the latest Companies House filings, Embrace employed 217 ‘consultants’ as of 2021.
The brokerage firm did not provide a more up to date headcount figure.
The filing also showed that in 2021 the mortgage brokerage firm made a loss of £3mn, with net liabilities of over £4mn.
The firm said its income was negatively impacted in 2021 due to Covid-19 and its subsequent decision to furlough advisers in the early months of the pandemic.
One industry source told FTAdviser the latest cuts were not surprising, with leads for new business drying up across the mortgage industry.
Back in May 2022, Embrace’s parent LSL reported lower profits after expansion of its broker consolidator Pivotal Growth had been "slower than expected".
LSL has committed some £33.5mn to support the acquisition of mortgage advice firms made by Pivotal Growth.
Cuts across mortgage industry
The past few months have been difficult for a number of mortgage advice network operators.
Last month, Mortgage Advice Bureau said in a trading update that it expected advice firms in its network to reduce their headcounts over the next two months due to a drop in house sales and therefore leads.
In December, mortgage approvals fell for a fourth consecutive month, reaching their lowest level seen since May 2020, during the first lockdown.
This trend is expected to continue into 2023, with gross new mortgage lending set to fall 15 per cent, according to UK Finance.
At the end of last year, a Leeds-based advice firm which specialises in equity release cut nearly 10 per cent of its staff citing the former prime minister Liz Truss’s "mini" Budget as the sole cause.
The bulk of the cuts were to support and manager roles - no advisers were made redundant.
In November, FTAdviser reported a significant drop in equity release business as clients hesitated to lock into deals at 8 per cent interest rates in the hope they would come down.
ruby.hinchliffe@ft.com
