Research conducted by The Professional Mortgage Network (PMN) since April 2004 has revealed alarming flaws that have been made by several leading networks in an attempt to convince mortgage professionals to swell their AR member ranks.
Among the practices uncovered by PMN are:
- Spreading alarm: Several networks are actively misleading potential ARs over the costs associated with regulation – and the impact red tape will have on their businesses post Mortgage Day.
- Massaging the numbers: PMN has uncovered several instances where networks are inflating their membership figures in order to make their network propositions more credible. One well known organisation has ‘grown’ its membership figures by over 1,000 per cent in order to create the impression that its offering is attractive to the AR community.
- Not disclosing ‘secret’ commissions: In the last four weeks PMN has discovered three instances of networks claiming that they will not be earning money off certain aspects of their members’ general insurance business only to discover that the networks concerned have created ‘back door’ revenue streams with key providers.
“Many networks are worried about the number of AR members they are currently attracting,” commented PMN managing director Dale Knight. “That’s all well and good. But it doesn’t mean that networks can go out and paint a totally false picture about the state of their businesses. To do this is to dupe someone into taking out membership.
“The kind of shoddy practices that we have become aware of is a major cause of concern to me and has the potential to tarnish the image of all mortgage networks. At worst, we’re all tarred with the same brush. At best, we have a far harder job in persuading potential members to join. Neither is an acceptable proposition as far as I’m concerned.
“I’d like to see open and transparent business dealings become the order of the day – and for insurance providers to ensure that the networks they’re dealing with are honouring the promises they have made to their members.”
Dale Knight is urging mortgage advisers who are keen to join an AR network to review PMN’s Mortgage Network Healthcheck – its new guide, which shows what answers to obtain from a potential network partner BEFORE signing up as a member.
PMN network guide urges would-be ARs to ask the following key questions:
- What are the network’s entry or exit costs – and what will the fees be post-Mortgage Day?
- Does the network provide run off Professional Indemnity cover?
- Are Life and General Insurance commissions available on an accrual basis, as well as up front?
- Does an AR member earn commission on renewals of Life and General Insurance policies? If they can, what are the minimum and maximum commission levels?
- What compliance support can an AR member expect?
- What experience does the network have in dealing with the FSA?
- What is the cost of bringing new advisers into the network?
- What is the procedure if an AR wishes to leave the network?
“You cannot underestimate how important it is for an AR to join the right network. If our guide only assists one adviser to see the wood through the trees in terms of the strength of a potential network partner then it will definitely be a job well done on our part.”
