Angelo Trapasso, managing director of Magic Loans, said that while the system was of great help to brokers, not only with better fees but also compliance support, some lenders were questioning whether they had a long-term role in the market.
He said: “Override clubs are great for smaller brokers as they may only do a couple of cases a month with a lender, but when they club together with 60 other people, they can get better fees. The problem is the longevity of the clubs as I’ve heard a couple of lenders are uncertain of their value as they prefer to deal directly with the firm.”
Steve Teague, managing director of Click, said it had looked into links with clubs but had a number of concerns surrounding them.
“They are a good idea but they are quite unwieldy for a number of reasons. You have got to match a number of different broker strategies so controlling that can be tricky. You get high commission fees but you’ve still got to deal with a middle man but the biggest thing is quality control, which is hard in a large group. Most brokers have good aspirations regarding compliance but there is always a dodgy type who is more difficult to root out in a larger group.”
However, Roy Beckett, manager at FT Partners, dismissed the claim, saying it had not felt any concerns.
“We’re not worried. We have meetings with our lenders every two months. They are very happy with us and we are confident we have a solid group of lenders behind us. I don’t know where this is coming from.”
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