Andrew Frankish is managing director of Mortgage Talk
The financial services industry as a whole – and the mortgage sector in particular – is moving is towards specialist exams and qualifications for niche sectors. This makes a lot of sense, and implies that there may ultimately be separate qualifications for, say, equity release. In a way, this approach is taking the lead from any number of other service industries, where it is commonplace for different branches of the same profession to have various differing qualifications, depending on their chosen sector.
For example, while at college, it is usual for law students to choose certain subjects in preference to others. Equally, accountants may opt to specialise in tax or other areas. So, the parallels are obvious in what the financial services industry is seeking to achieve.
The thought here is that, if you are going to specialise in giving advice on a particular topic, then you will be in a position to extract a business benefit from the fact that there are relatively few experts in that specific field. In other words, you will either be able to make a charge for your specialist advice, or you will get business that you would not previously have obtained as a result of your expertise and knowledge.
With this in mind, the quid pro quo is the not too far fetched idea that, if a broker or adviser can benefit from additional business – and hence profit – he or she should be required to go through the pain barrier of studying and taking some exams for the privilege. It’s the same in most professions. The more specialised you become, the higher the premium you can command.
Continuing Professional Development
One of the issues we are often asked to address is that of Continuing Professional Development (CPD). It’s a notion that’s familiar to hundreds of thousands of professionals throughout the UK being, as it is, common practice among accountants, the legal profession and the like.
The rationale here is that most of the public knows that doctors, lawyers, dentists and other professionals have to undergo a programme of ongoing training, laid down by their professional bodies. If they don’t, they run the risk of their practising certificates being revoked, or at the very least a restriction placed upon them. And, while some of these professions might not have a perfect media image, at least the general perception among the public is that they are honest and trustworthy.
In its quest to be recognised as a profession of equal status, the mortgage industry has to take a leaf out of their books. While some of the larger brokers make properly structured courses available for their advisers, all too many do not. And this approach really is letting the industry down. Indeed, this fragmented view really has to change if the mortgage industry is to be taken seriously and brokers accorded the same sort of professional standing as accountants, lawyers and so on.
So, in an ideal world, although we shouldn’t really have to exercise any form of compulsion to encourage brokers and advisers to embark on a CPD programme, in reality we probably will have to. This then begs the inevitable question – how can this be achieved?
The perfect scenario
From a responsible employer’s perspective, the perfect scenario would be to offer individual advisers a series of voluntary courses that they could dip into at will, on the assumption that everyone is their own best regulator. But is this vision of Utopia workable in practice? Probably not, so we need to investigate more effective solutions.
To make sure that advisers actually participate in lifelong learning, the only real answer is some form of compulsion. This would have to take the form mentioned earlier of restricting the earning capacity for the individual adviser unless they had amassed the requisite number of CPD points during a particular period. Courses, either offered by the broker firm or provided by an outside training agency, would give the adviser the option of securing a specific number of points by attendance.
What we then need is some way of ‘feeding back’ the points tally for each individual to a central database, to ensure that each adviser keeps up with his or her obligations. This can be done by software offering a way of logging how individuals are progressing with their training obligations. A solution such as this, operated by employer and employee as an alliance is one of the best ways of ensuring that the firm’s staff keep up-to-date with training, tests, reading and observations.
There are a variety of routes towards exam qualification. These include the Chartered Insurance Institute (CII) CSS exams, the ifs School of Finance route and the MAQ FDC qualifications. There are pro’s and con’s to each and, as an organisation, we have chosen the CII CSS route, because it offers whole modules for different areas of expertise. Indeed, our newly formed Mortgage Talk Academy has already chosen to utilise the online booking facility.
As though to partner this concept, the CII exams can now be sat monthly. The exams have the function of making the industry more professional, but also mean that ‘new blood’ brokers are rarer, because the requirement for professional qualifications is often seen as a discouragement. Nevertheless, this has effectively purged the industry of unscrupulous operators and participants, putting us on the same footing as solicitors, accountants and surveyors – a perspective of which I’m all in favour.
Countering the shortage
But there are still loopholes in the industry. Some areas are not regulated, such as equity release and secured loans. There are also problems in that the pot of advisers has now been reduced significantly. Overall, this has altered the customers’ perspective of who we are, and how we act.
Over the last several years, mainly as a result of increased industry regulation, we have witnessed a reduction in the number of qualified and skilled mortgage advisers. To counter the problems surrounding recruitment, Mortgage Talk recently launched a new training academy, aimed at encouraging recruits to enter the mortgage industry.
The decision was precipitated by the Financial Services Act legislation of two years ago, but has been heightened by a lack of adequate education and training. We plan to offer placements in our academy to six candidates twice each year, with the first tranche being recruited this month.
We are devoting a suite of training facilities to the scheme within our Rotherham head office. Successful entrants will commence their training in a classroom environment and will follow an intensive training regime over a six month period with a high ratio of one-to-one tuition leading to the CeMAP qualification. This requires recruits to pass two examinations, the CF1 and the CF6, undertaken via the CII.
After this initial introduction and preliminary training, students will progress to six month’s field work, where they will shadow an existing Mortgage Talk adviser. In this environment, they will meet with clients in actual scheduled appointments and undertake administrative duties. Subsequently, they will gain experience in compliance, administration, customer services and sales.
The academy forms part of our overall business model, fuelling a long-term aim to enable students to become fully conversant with all technical aspects of mortgage-related financial services. Recruits who successfully complete the course and demonstrate the qualities of enthusiasm, willingness to learn, commitment and ability to sell will be retained by Mortgage Talk and enter into our career progression scheme.
Because of the nature of our franchise business we have an ever expanding need for high calibre advisers in our network. We envisage graduates taking up a variety of positions at various branches throughout the country where they will be able to develop their skills further and prepare themselves for promotional opportunities.
The fact that the CII facilitates online learning means that our candidates can sit their revision papers online, which is a positive step. There’s no doubt that recruitment is the hardest thing in the industry, and that professional status has brought its own issues to this arena.
Charging fees
Nevertheless, I still feel that brokers in general do not fully appreciate the need to consider charging fees to reflect their professional status. In an ideal world, the Financial Services Authority (FSA) ought to guide us more in this area. For example, its Mortgageslaidbare website should be promoted more heavily, to give prospective entrants into the profession more information about what consumer expectations there are, what qualifications they need, and how to achieve them.
Indeed, the fact that we can use letters after our names gives us a public-facing credibility that hitherto we have lacked. We as brokers ought to use this opportunity to distance ourselves from the past associations that much of the public has had with mortgage brokers and financial services providers. And, instead, we ought to celebrate our newly acquired professional status. After all, it’s been a long time coming, and it’s about time we were regarded in the public’s eyes with the same degree of credibility as solicitors, accountants and surveyors.
So, in conclusion, the answer is clear. The mortgage industry deserves proper education, training and regulation for its own well-being. Add a separate element of training compulsion and proper monitoring into this, and we can have a financial services industry that is the envy of the developed world.
