The new company aims to set a benchmark in the mortgage principal marketplace.
The launch follows a series of regional foundation roadshows at the end of October, each of which were oversubscribed – according to the company this is an early indication of the strong interest among MGM Assurance’s existing appointed representatives in affiliating with MGM Home Finance as a mortgage principal rather than registering to be directly authorised by the FSA.
Initially, founder membership of MGM Home Finance was offered to MGM Assurance’s appointed representatives and will soon be extended to brokers industry-wide. The foundation days were attended by virtually all MGM Assurance’s distribution firms and over 90% made an immediate decision to join.
“Unlike many of our competitors, our scheme will meet FSA requirements, as far as they are known, from the start - in advance of regulation. Our entire proposition is scaleable and we have the resource to expand our distribution without compromising standards,” says Stephen Maskens, manager, MGM Home Finance.
“It helps that our parent, MGM Assurance, is one the most experienced operators of tied agency in the life assurance industry. It already has an established 15-year regulatory relationship with the FSA for investment business and has the compliance resources in place.
“Experience of regulation is key to interpreting the rules and will ensure our members operate to high standards with minimal disruption to their existing business model.
“To date, many companies are offering early membership of a mortgage network but without any real application of a T&C strategy. Some of our firms have subscribed to these services since January but have yet to meet a compliance or training manager.
“Choosing a provider that monitors you remotely or infrequently is storing up problems for the future. What is needed is a company that can deliver light, personal supervision supported by technology which creates robust records to support sales.”
“Most packages offered by mortgage principals will be similar – comprising compliance and training, PII cover, and mortgage sourcing facilities. What will really separate the players will be their attitude to brokers, the ability to develop business, and a truly personal service. The organisation’s resource will also determine the price for providing the services,” says Stephen Maskens.
Integral to the MGM Home Finance proposition is a comprehensive IT platform using a highly customised version of Trigold’s Prospector system which will minimise the effort involved in the sales process whilst automatically creating records that will protect the broker in the future.
Says Stephen Maskens: “In terms of pricing, MGM Home Finance is in the enviable position of not needing to create a margin on every service it provides to mortgage brokers. As a manufacturer of a successful mortgage term product our existing resources will enable us to slash the cost of supporting mortgage regulation.”
Features of MGM Home Finance include:
- Bespoke Trigold customisation allowing brokers to cross-populate information already obtained, thus reducing administration time and enabling more cross-sales and more time for mortgage appointments.
- Access to every lender in the marketplace via a broad mortgage panel arrangement offering some of the highest available procuration fees, available on exchange.
- Access to general insurance through two specialist providers, Paymentshield and Select & Protect.
- A low fee structure that will actually be free to most mortgage firms.
- A guarantee that the fees will be maintained at least until March 2005.
- A ‘Special Reserve’ fund established for founder members from the income that MGM Home Finance receives.
Says Stephen Maskens: “Our overall aim is to make mortgage business simple to transact. All our business partners either already have, or are on the point of developing an ‘e’-trading capacity that will complement our own advanced systems. This said, we also cater for a paper-based application process as we recognise that, as yet, not all mortgage brokers are ‘e’-proficient.
Another distinguishing feature of MGM Assurance’s approach to business is the fact that there is board representation by broker firms.
“We believe MGM Assurance is the only company in the marketplace to encourage broker representatives to meet regularly at board level. This truly involves them in the development of the company and allows direct communication to the board. It helps us understand the needs of our firms and monitor the service that they are receiving. Our size and the individual service we provide to each of our broker firms are two of the most cited benfits of dealing with us,” says Stephen Maskens.
Any adviser registering with MGM Home Finance as a founder member will receive a guaranteed share of a projected £1 million “special reserve” fund built from contributions from MGM Home Finance income.
Says Stephen Maskens: “This in itself is another unique feature as it is not based upon future company value or profit share like some competitors. This is an allocation directly from the income MGM Home Finance earns, allowing a mortgage broker to determine the value they receive by virtue of good sales practices. It is good for everyone involved”.
MGM Home Finance will accept new members from early November. It believes the pricing and unique benefits will appeal to the smaller firms needing a high level of support but also to some larger firms that can benefit from offsetting some of the costs and liabilities that regulation will bring.
