The range of products available in the mortgage marketplace is wider and more flexible than at any previous time. The past decade has seen a sustained push by small specialist lenders bringing innovation, both in terms of service and products. Their entrance has intensified competition, meaning all firms have had to continually review and improve their products and services to be successful. These smaller mortgage lenders have only been able to flourish because they have had access to a productive and reliable distribution channel.
This is where the growth of intermediaries, who now account for over 80 per cent of originations according to recent reports, has been so important. However, the sector has also seen the arrival of statutory regulation, bringing a huge compliance burden on intermediary firms. This has led to a rise in the number of networks that seek to provide solutions to potential members.
The widening role
The role of networks has also widened following regulation some two years ago, and we are seeing a sustained appetite among mortgage advisers looking for help in adapting their business to the new environment. Networks themselves are also keen to grow and develop their firms within the regulatory framework. Nowadays brokers expect the networks to deliver. The whole proposition needs to be transparent, including pricing. This will help brokers to compare like with like and ensure they make the right choice of network that fully meets their needs.
For example, brokers can now enjoy all the benefits of being a member of Mortgage Intelligence for a straightforward, flat fee of just £99 per month.
In response to broker demand, we have launched a new appointed representative (AR) network – Free Spirit – with a simple pricing option. The move is in response to broker demand. Intermediaries can now sign up to Free Spirit secure in the knowledge that there is no complicated fee structure and no turnover fees with a comprehensive personal indemnity (PI) plan included. The advantage of the Free Spirit price plan is that brokers will be able to quickly reconcile what their earnings are as there is only one small monthly deduction. It’s all about choice. We have listened to what brokers have to say and have responded by tailoring our service to meet their needs. This innovation means that brokers have access to all the benefits Mortgage Intelligence has to offer, for a flat fee. The new pricing structure will run alongside and compliment the existing proposition that is costed on the basis of charging fees on a firm’s turnover.
Responding to new
challenges
A networks’ ability to respond to new challenges very much depends on the infrastructure they put in place from day one. It is true to say that some of the traditional networks have stuck their heads in the sand and been slow to respond to new challenges in the market, but this is a minority, and has resulted in a struggle for those businesses to turn a profit. But the fact is that the role of networks has increased following mortgage regulation. However, a number of mortgage networks underestimated the cost of compliance and the difficulties involved in managing ARs. Several went in with a high degree of optimism but some of these did not achieve critical mass and have since disappeared from the market. While the number of advisers in a network is important, ultimately quality is king.
The most forward thinking networks are constantly striving to improve the service they offer. However, a networks’ ability to respond to fresh challenges depends on the infrastructure that has been put in place from day one. Those networks that are not built on solid foundations will be found out. The Financial Services Authority (FSA) will make sure firms are operating to a certain standard. Indeed, the FSA has recently suspended four smaller networks from recruiting any more members after being found guilty of not having the right checks and balances in place to ensure that their consumers are being treated fairly.
We are now at a stage where it is the survival of the fittest and a network that doesn’t make a profit doesn’t have a future. Brokers wants to see bang for their buck. This is likely to include strong IT, compliance and Training and Competence (T&C) people along with business development managers (BDMs) that are there to support members as well as access to exclusives. At the end of the day, brokers need to be assured that what their network offers as a business partner fits with their needs. It’s as simple as that.
