There has been a recent spate of articles and letters about mortgage networks along the lines of ‘size isn’t everything’.
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Not surprisingly, they have been written by the chief executives of mortgage networks that languish outside of the top tier. They are left fumbling around and try to rationalise their lowly league position by focusing on the ‘quality’ issue.
This is generally insulting to the larger networks such as Network Data and Mortgage Times who are no less professional, and generally more so, than their smaller brethren.
However, there is agreement that economies of scale do prevail and should lead to lower administrative costs per appointed representative (AR) firm.
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Take, for example, the annual salaries of the chief executive, which generally sit around the £80,000 mark. If this is spread over 800 AR firms, as in the case of Network Data, it amounts to £100 per annum per AR. Many networks are one-tenth of this size, with 80 ARs or so, making the average figure £1,000 per annum per AR contribution to the chief executive’s salary. A big difference.
The bottom line is that the larger networks are able to pay out higher procuration fees and insurance commissions to the ARs rather than see the money go into the pockets of the chief executives.
