The recent credit crunch has had an adverse affect on much of the market. Undoubtedly the non-conforming market has borne the brunt of this, with a number of lenders going into administration, restructuring their product offerings or moving back from the adverse market altogether.
Coupled with the recent tightening of the Financial Services Authority (FSA) on firms, it is clear that networks will have a far greater role to play in the changing market environment.
Although much attention has been given to the plight of lenders, it is clear that the recent market troubles have also severely impacted on brokers, and their business models, leading some firms and intermediaries to question what role they will play in the market going forward.
Reconsidering positions
While it was speculated that the advent of mortgage regulation three years ago would lead to the biggest influx of advisers signing up as appointed representatives (ARs) to the various networks operating in the market, it has been the recent turmoil that has led many to reconsider their position.
The FSA is, to a large extent, responsible for the move by intermediaries to become involved with a network as a result of the changing regulatory environment.
The regulator has, over the past year, shown its teeth and been much more vocal in its assessment of the market, calling for improved practices in many areas, centring on the issues of record keeping and ‘Treating Customers Fairly.’ With the FSA moving to a principles-based approach, intermediaries are understandably keen to develop links with organisations that can help them in meeting its requirements and progressing with their businesses at the same time.
As a result, networks and other organisations that can offer compliance support will be inundated with queries, and for networks to prosper it is clear that they must respond to this need, be it through road shows, compliance support desks or greater involvement in the individual businesses.
Financial Promotions is a similar area in which firms, both directly authorised and AR, have needed assistance in the past, and with the FSA stepping up its enforcement action of firms that fail to comply with the rulings, compliance and aid in Financial Promotions will be at the forefront of many advisers’ minds when choosing a network.
Feeling the brunt
The concerns over product choice have also forced many in the industry to consider their market strategy, regardless of their position. While lenders have had to adapt their offerings at very short notice, sometimes pulling back from the market on a single day, it is brokers and their customers that feel the brunt of this at the coal face, and for this reason some have decided to join networks as they believe it provides them with product certainty.
As with much of the market, networks have had to adapt to changing conditions, and despite the recent market turbulence, there is perhaps no better time to look at the opportunities and support that a mortgage network can offer.
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