Unified vision is the benchmark in the new world
Brokers will have to align themselves with lenders’ aims if they want to thrive in the post-credit crunch landscape
Many mortgage brokerages are in danger of losing out in the post-credit crunch shake-out, especially in light of the Financial Services Authority’s Mortgage Market Review and Retail Distribution Review proposals.
Of course, lenders are already reshaping the intermediary playing field, with their relationship resources increasingly focussed on a chosen few.
But there is much that brokers can do to ensure they are included Unrestricted lending potential, in terms of both quality and volume, no longer drives lender relationships.
Regulation, management of risk, fund availability and the drive to achieve wider margins through business efficiencies are the new benchmarks.
It’s clear that only those intermediaries with propositions that match lenders’ requirements will generate full-fat proc fees in the next phase.
More marginal firms may pick up leaner fees, while the rest will not have access to mainstream mortgage lenders for their clients’ borrowing requirements.
Feedback suggests that there is still much to be done by lenders and brokers when it comes to building structures and processes that can accommodate changing regulatory and compliance requirements.
Lenders will want to know more about the distributor firms and processes by which products are sold
But savvy advisers are already ensuring that their firms, clubs or networks have a clear picture of providers’ operational and strategic objectives. Many are tailoring their strategies to ensure the best fit in this regard.
In an industry presentation just before Christmas Nici Audhlam-Gardiner, director of banking at Santander, argued that it was a no-brainer that in light of the MMR lenders would have to identify criteria for preferred broker partners.
So lenders are looking to work with selected distributors to ensure they have in place a compliant and cost-effective route to market that is fit for purpose.
They are bound to want to know more about the distributor firms, approved persons and processes by which their products are sold.
This is a significant move forward compared with relying on brokerages’ company reference numbers as adequate evidence of suitability, which was the practice of many lenders in the past.
Brokers fail to understand and comply with criteria set by lenders at their peril.
It’s beginning to look like the new intermediary world will have room for fewer but better organised distributors. This group will constitute compliant, scalable routes to market for mortgage providers.
The objectives of these firms will be congruent with that of their provider partners, supported by a proactive and dynamic relationship architecture.
In this architecture lenders and brokers will share value from their relationship activities. Above all, they will look to create a professional, transparent and fair environment in which customers can prosper.
It’s starting to look like only those brokerages with the foresight to develop and maintain key lender partnerships and relationships will be in a position to capitalise on the economic recovery as it gathers pace.