Ever since ‘Mortgage Day’, which now seems like a lifetime ago, there has been continued debate raging over mortgage intermediaries’ regulatory status. Both camps have had their fair share of troubles, be it with network inadequacies or struggles with regulatory guidelines. The pages of our esteemed trade press wouldn’t be the same without the conjecture and opinion surrounding this great divide but ultimately, of course, it is up to individual firms to chart their own path through regulatory waters.
In a challenging environment it is vital for businesses to get as close to their customers, clients or members as they can. The old adage that the customer is always right may not always be the case but trying to fulfill exactly what the customer’s wants is of growing importance amidst touch economic conditions. This is not always easy, but research and feedback is a good way to start the process.
Perceptions
At TMA we recently undertook extensive research to try to gauge directly authorised brokers’ current perceptions of the market. Overall, the results were encouraging but like most things in life there were a couple of areas where, as an industry, we could do better.
The big question of the survey was understandably surrounding thoughts on current regulatory status. The result proved to be a positive one with an overwhelming 89 per cent of those currently trading as directly authorised not actively considering changing their regulatory status anytime soon.
Only 4 per cent of respondents said they were actively considering changing their regulatory status with 7 per cent stating that this was maybe a consideration due to current market conditions.
When prompted to explain the reasoning behind the decision the 11 per cent, who responded ‘no’ or ‘maybe’, highlighted increased FSA regulation allied with the perception that the FSA wants them to become appointed representatives as the top reasons. Interestingly less than a fifth highlighted that they would be better off financially by joining a network.
The survey also found that a mere 4 per cent of those currently trading with DA status do not value the services offered by mortgage clubs. Results found that an overwhelming 82 per cent of DA brokers responded positively to the benefits offered by mortgage clubs reporting that they found the services offered to be great value whilst 14 per cent stated that they were unsure of the full benefits.
The positive and decisive response from DA brokers, in terms of maintaining regulatory status, is reassuring and aligned with the fact that the vast majority of DAs value the services of mortgage clubs provides us with great optimism. The positivity in the survey certainly flies in the face of some industry reports concerning a mass migration for DAs to change regulatory status.
Networks
Another area which has gained many column inches lately is the issue of networks and proc fee payment. In this area of the survey almost two thirds reported that recent stories regarding some networks withholding proc fees has reaffirmed their commitment to DA status. Around 58 per cent of those surveyed reported that such stories had reaffirmed their commitment to remaining DA whilst only a quarter (25 per cent) reported that the issue had not affected their thoughts on regulatory status. Around 17 per cent responded by saying that maybe they have had some effect.
These figures illustrate the importance of prompt payment to brokers and highlight the concern over this issue which has been infuriating brokers over the past few months. I am sure the majority of networks are working hard to keep their houses in order but this issue obviously remains a concern for some brokers. Prompt payment of proc fees and commission for ancillary sales certainly remains a key requirement for the intermediary market.
Ancillary products
However, ancillary activity does not appear to be at the top of the agenda for some. Over a third of directly authorised brokers surveyed reported that they are still not, or are unsure about, looking to offer new products and services to their existing client base. On a more positive note, the results showed that almost two thirds of directly authorised brokers (64 per cent) are actively looking to offer new products and services to their existing client base. However, 24 per cent responded that they were not searching for product or service additions and 12 per cent were not sure if any additions would prove to be a positive activity.
