What chance do new mortgage advisers have of sourcing the right product quickly? Especially when the main sourcing systems are returning in excess of 10,000 products, more new players come into the market every month and lots of lenders spend time and effort finding new and increasingly sophisticated ways of manipulating their positions in the tables.
As if that’s not bad enough, they also have the added headache of trying to find a way of sourcing in the non-conforming sector for the small number of cases they will come across that do not conform. The main platforms only have a very limited number of lenders and the extensive criteria of each of these lenders available to them – this is not ideal. In the current climate of Financial Services Authority (FSA) scrutiny of the non-conforming market this is going to become increasingly important. The main platforms really consist of two dominant players, Trigold and Mortgage Brain; plus a few additional players with much smaller user bases, namely Mortgage 2000, Moneyfacts and Network Data. However, as far as dedicated sourcing systems for non-conforming business go, only the Enterprise EDGE system and Primrose’s Evaluate really provide in this sector.
Experienced not taught
These days, the easiest part of being a new adviser is passing the exams. It’s only then that the real work begins. Much of what they learn in training is of no use to them in the real world of having to place a mortgage for one of their clients and, in many cases, a lot of the actual placing knowledge cannot really be taught only experienced. Therein lies the conundrum.
When you are new, there is an over-dependence on the sourcing system. This is worrying because what new advisers are really doing is ‘practising on clients’. This is not only dangerous for the client but also for the adviser. Today’s increasingly litigious environment means that there is no real margin for error. The FSA demands certain standards from regulated advisers which simply cannot be gained easily without the experience of sourcing and placing real cases for at least three to six months.
Increasingly difficult
Traditionally, when a new adviser gets qualified they would have the opportunity of working with an experienced adviser for a period before being allowed to ‘fly solo’. However, in a shrinking industry this is becoming increasingly difficult to do and, more importantly, largely due to the increased costs of regulation much of this is not possible today. Unlike the investment side of the industry there is no requirement with mortgage advisers to have immediate and relevant experience before becoming authorised and being allowed to see clients unsupervised. Even more worryingly, mortgage advisers are not individually registered, whereas investment advisers are. This could mean that employers under heavy commercial pressure may allow advisers loose on their clients earlier than they would otherwise do with potentially damaging consequences for clients who may as a result be badly advised.
Solution
What’s the answer? I am not sure. However, I do feel individual registration with the FSA would help raise the bar as would a mandatory requirement for advisers to have achieved a certain amount of experience before being signed off as competent. What can employers do when recruiting? Well they could restrict the advice that an adviser can give in the early days, or limit the type of cases they could potentially be allowed to advise on. I think that – while it’s a pain – employers should get all new business signed off by a competent adviser in the first six months before the advice is given for all their new advisers. This would not only help the adviser to fly that much quicker but it is ultimately an investment on the part of the employer to mitigate future risk by ensuring the early competency of their new advisers.
The FSA could take the lead here as firms are understandably averse to making changes that are seen to be laying more compliance than is required. However, I don’t think that is likely anytime soon.
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