John Malone, executive chairman of PMS, hit back at suggestions DA firms might be submitting worse quality business than appointed representatives – a possible explanation for proc fees dropping.
He said: “At no time have I ever been told that DAs have more problems with fraud or that their cases are worse quality than ARs. The move at lenders is to do with cost not quality.”
Robert Sinclair, director of the Association of Mortgage Intermediaries, said: “The one or two-man DAs that are sitting within IFAs tend to be good firms writing quality business.
“If this is about lenders working out whether they’ve got system controls over the quality of the business being submitted to them, that’s one issue.
“If we’re talking about the issue of a lender only having x million to lend and therefore they’re going to reduce who they’re going to lend through, then that’s a different issue.
“They could use quality as an excuse or proxy for that or they can provide another reason for it.”
David Copland, chief executive of Pink Home Loans, believed the move could be driven by tightening up on compliance requirements at individual firm level.
He said: “We’re getting asked lots of questions about our recruitment process and our monitoring process and we were never asked about these sorts of things before.
“If you let in lots of individual DA firms out there, it’s a lot more difficult for the lenders to glean that information.
“That’s part in parcel about why we’re starting to see networks getting the better more exclusive products.
“If you’re a lender, it’s a lot easier to go to 20 larger firms who write a lot of business in the mortgage market and get that information as opposed to get the information on 5,000 DAs out there. There just isn’t the manpower to do it.”
But Peter Brodnicki, chief executive of Mortgage Advice Bureau, cast doubt over big being better in terms of quality.
He said: “Scale is important to lenders because perhaps scale is related to financial security, investment systems, technology and everything else that’s required but I think they’re looking at business quality in a very big way at the moment.
“The cost of processing those applications is a major feature now. Just because you’re big doesn’t mean you can control that, if anything you could argue the challenge is greater. At the moment the bigger networks are having the challenge of keeping the boxes ticked on scale.”
