Networks urged to let ARs sell direct deals
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There have been calls for networks to change their compliance rules to allow appointed representatives to advise on direct deals more easily.
At present, some networks have strict compliance procedures for ARs who want to go off-panel and offer direct deals.
Mortgage Strategy has been con-tacted by a number of ARs who wish to offer direct deals via their network and still be covered under its professional indemnity cover.
One AR believes it is holding back his business.
He says: “Networks not allowing us to offer direct products is pre-venting us from giving the best advice. I understand that for com-pliance reasons they need to carry out due diligence on lenders but they should be thinking about their members’ survival too.”
But Dev Malle, sales director at Personal Touch Financial Services, says some networks are looking at whether they should find a way around compliance issues to allow ARs to offer direct deals.
He says: “Lenders do not allow ARs to offer direct deals for several reasons. As soon as an intermediary speaks to a customer, they are classified as providing advice.”
Malle says this means a broker has to issue a Key Facts Illustration to be covered by the network, but many direct lenders will not allow brokers to offer a KFI.
But he warns: “When the market improves and there is less need to dual price there is a danger that lenders will not see the need to eradicate dual pricing because brokers will have access to deals anyway. This could ultimately weaken their position.”
Sally Laker, managing director of Mortgage Intelligence Holdings, says her network has a facility for ARs to offer products from off-panel lenders but it looks at cases on an individual basis.
She says: “If a direct product is the only solution or is from a small building society that does not want to deal with a network we will look at it on its merits, and can agree for an AR to go off-panel.”
Mike Fitzgerald, sales director at The Emba Group, says: “As part of a network we sometimes get deals that are better than the ones offered direct. And a lot of lenders won’t let brokers offer deals even if their network does.”
Readers' comments (2)
Doug Bennett | 8 Jun 2010 6:32 am
'A lot of lenders won't let brokers offer deals even if their network does' You can't offer a direct deal, you can only guide your client towards getting it. From a brokers perspective, with over 20 years experience, "I wasn't qualified enough to be able to advise on direct deals" according to my network. I have access to the information, as do my clients via the web, enabling me to advise my clients of the best deals in the market, but have to recommend 'on panel' and shouldn't look at the direct offerings according to my compliance department.
It actually doesn't make economical sense for the network not to be able to accomodate. If the client saves in some instances £200 per month by going direct, it may mean they can now more comfortably afford the IP or CIC, which means more life commission, which means a higher income to the network, OK, it is clawbackable but with a greater than 95% persistence rate, the additional risk is negligible, from me anyway.
In addition, it reduces the risk of losing the client and future income. As a client, when your mortgage deal is coming to an end, your radar for information is switched on, and these direct offerings suddenly appear all over the place. If your broker has recommended a deal, and the client comes back and says but I have seen this one in the Mail on Sunday, and however you word it, "Oh that is a direct deal and I do not have access to it" credibility and future business goes out of the window, along with referrals, life biz, wills, B&C etc...
Any ideas, any one?
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Gary Watts, Which Network | 9 Jun 2010 10:41 am
This is a difficult probem, and I can certainly see where Dev is coming from on this issue. Maybe things will change if we are driven more down the fee charging model, or once the market picks up and the lenders face more competition?
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