MBE 2011: Bank based mortgage advice is failing
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Offering mortgage advice in branch is failing, says Paul Shearman, proposition director at Openwork.
Speaking at the Mortgage Business Expo in London today, Shearman told delegates: “The banks are struggling in terms of their bank based distribution - it is failing.”
He estimates that some banks are only doing enough mortgage business in branch to justify one adviser between two or three branches - which he says presents an opportunity for brokers.
Shearman also says the tide is turning against DAs.
He told delegates: “The amount of regulation that is coming out of the FSA such as the MMR is intense - the MMR is due to be around 700 pages long.
“It is a real challenge for brokers who are independent.”
He also said the larger lenders are starting to concentrate more on the large entities and not individual DAs.
Speaking about some of the challenges facing networks, Gemma Harle, managing director TenetLime, says ongoing regulatory costs are taking their toll on networks.
She says: “The charging structure of networks is under threat, the regulatory landscape is creating a financial challenge. Networks need to make sure that its ARs meet fitness standards, as does the network.”
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Readers' comments (5)
IAN WINDSOR-SMITH | 16 Nov 2011 1:20 pm
Banks have never given advise, they only sell, always have, always will! Should it be FAILED AGAIN? Not FAILING? Is this news?
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Anonymous | 16 Nov 2011 1:39 pm
Well said Ian, but no, this is not news. It is networks taking the opportunity of a little more self promotion rather than focusing on the issues at hand.
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Kevin Fowler | 16 Nov 2011 1:45 pm
The tide isn't turning against DA's but is turning for them. Members of networks are fed up with the ever changing goal posts and with the banks continuing to attract bad press there is a perfect storm for DA firms to flourish.
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Dale Knight | 16 Nov 2011 5:44 pm
For me the DA with scale can make this work but smaller firms will be put under increasing regulatory pressures which may give Networks more chances, but to be honest many of them simply cannot drive sufficient margin unless they put their fees up.
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Peter Turner | 18 Nov 2011 5:57 pm
I agree with Kevin Fowler. The banks continue to fail and in the end a network is only there because it can make a profit out of its members.
Nothing wrong with that but I have seen too many members follow the network's rules only to get stitched up when it turns out that those rules were inadequate - quote apart from those who have gone down the pan taking members' commission and earning power with them.
DA (and limited liability!!!) ought to be the preferred business model for all advisers.
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