The worst Christmas gift for staff and ARs

22 December 2009 | By Robert Thickett

The collapse of Mortgage Times, as revealed by Mortgage Strategy yesterday, was the end of an era.

Two years ago, at the height of a decade-long bull market, the battle for the top mortgage network was between Network Data and Mortgage Times.

Now both those brands are no more. Staff at Mortgage Times, who were only told on Monday that the firm was going into administration, now have a dire Christmas in front of them.

For appointed representatives of Mortgage Times, it’s a double calamity. Many have thousands in unpaid commission owed to them and they now have to find a new network to trade under or go directly authorised, both of which are easier said than done.

Having been caught up in the collapse of one or even two networks (for those ARs unlucky enough to have jumped from Network Data to Mortgage Times), many will be equally shy about getting in bed with another firm.

Even due diligence, checking over the previous year’s accounts of any prospective firm, could be fruitless in the current environment.

So if you’re looking around for a network what should you do?

The one rule of thumb that does appear to be accurate is that there is no smoke without fire. Mortgage Strategy has run countless stories over the last year about non-payment of commission by Mortgage Times, just as we did about Premier Network Group, Network Data before that and Prestbury.

Those networks that overstretched themselves and boorishly boasted about the size of their AR numbers were the first to struggle once the good times went away.

Often ARs at these firms were charged less than at rival networks because the firms made the bulk of their profit off the back of their bulk distribution to lenders.

When mortgage levels dropped, the deficiencies of their respective business models was plain for everyone to see.

And if you are chasing commission, what do you do? Again there are no clear answers. Although staff were told the firm was going into administration yesterday (and that they would not be paid) there has been no official statement about this from Mortgage Times’ directors, other than their email to ARs yesterday that the firm’s Financial Services Authority authorisation had been revoked. Great.

Once again, the regulator needs to take part of the blame. Why, when a mass of ARs contact it complaining about non-payment of commission by network X, does it not act faster and send out a warning to the firm’s ARs?

The regulator has seen this pattern of events happen countless times now but depressingly the result has each time been the same - the same public inaction by the FSA.

Readers' comments (12)

Anonymous | 22 Dec 2009 4:41 pm
Having watched the death throes of the Mortgage Times I have been disgusted by the actions of the management team.

I believe the FSA and SFO should launch an investigation. There has been a deliberate and concerted campaign by people at Mortgage Times to prevent information being provided to Authorised Representatives. Strongarm legal tactics have been applied to stop people communicating the problems. The effect of this has been to prevent Authorised Representatives from making an informed choice and to penalise them for moving elsewhere.

I would strongly urge Authorised Representatives to review their correspondence with Mortgage Times and where they feel they have been misinformed they should make a complaint to the FSA with the SFO cc-ed in.

I would further recommend that Authorised Representatives speak to their solicitors to explore their options in respect of civil litigation against the directors. Personal liability will exist where the directors of a company continue to trade when they know they cannot meet their debts as they fall due.

The Mortgage Times group deliberately chose not to file their annual accounts on 11 December 2009 to prevent their dire performance being put on the public record. This prevented the Authorised Representatives from making an informed decisions.

The directors have been very conscious about the public record - indeed on October 14 all the directors changed their address on the company records. It is difficult to speculate on the reasons but perhaps it was because they had found out that on 15 October a rival newspaper would be publishing a lead story about the serious problems in the Mortgage Times. Perhaps the management were worried that their multi-million pound homes might anger the people who weren't getting paid? Anyhow the directors conformed to type the following day by instructing Carter Ruck to pursue the newspaper for having the brass neck to report the situation. Carter Ruck's hourly fees exceed £1,000 but it has not been disclosed whether this payment came from the company. If so, this was money which should, if the directors were acting within their fiduciary duties should have gone to Authorised Representatives.

There are many unanswered questions about where money was moved to when the company was still solvent. I have been told that the directors refused to answer a question about whether money had been transferred to any companies which were linked to Mortgage Times, any of the directors or any of the employees.

I appreciate people are seriously disappointed but please do not expect other people to take action on your behalf. Take action yourself today. Get your correspondence off the computer and check it over. The people who have frittered your money away over the last fifteen months are relying on your inactivity.
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Bryan Haire | 23 Dec 2009 12:39 pm
The FSA will no doubt once again hide behind the excuse that they couldn't get involved in what was a business agreement between the Network and it's AR's.
This was what they used with NDL until the the level of protest got so much that they had to take action. The writing was on the wall regarding MT for a long time but the FSA chose to spend their time pursuing individual Brokers for Mortgage fraud, effectively acting on behalf of the Lenders and not the Brokers.
It has only added fuel to the call for the FSA to be wound up as they appear to be completely ineffectual and a very expensive drain on all our pockets.
If the Tory Party promises that on being elected it will as stated get rid of this lot then I for one will reluctantly give them my vote.
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Just simple uncaring greed | 23 Dec 2009 3:23 pm
Many ‘successful’ businesses in the last decade have been built on uncomplicated ‘reactive’ strategies; quite simply when there is an abundance of new business even very average individuals can be quite successful. But those with entrepreneurial foresight in a market awash with business will seek to grow and multiply through various levels of service diversification, otherwise known as lateral business planning.

Nevertheless, even the highly successful entrepreneurial businesses would have been seeking to reduce costs in the current environment and certainly throughout the last year in order to ride-out the problems and seek further prosperity as the market begins to recover.

Clearly, the Directors of MT would appear to unfortunately fall very much in the camp of ‘reactive’ almost nearly average individuals. For this reason I very much agree with comments above in terms of further investigation.....uncaring incompetence should not go unchallenged. It leaves a dreadful stain on the market and it causes these business flops to credit themselves with being something they certainly are not…..smart.
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Anonymous | 23 Dec 2009 3:36 pm
So who would you say is the most secure network, I'm looking at joining a network.
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Anonymous | 23 Dec 2009 4:01 pm
Without wishing to detract from the sad chain of events that has culminated in this weeks announcement, you will find that the directors addresses changed on the Companies House register as a result of a new system implemented by Companies House whereby director's private addresses are no longer displayed and the company address is noted instead. There is nothing contrived on their part, this new method affects every company and every director on the register.
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Anonymous | 24 Dec 2009 10:27 am
The end of mortgage crimes!How did they get away with it for so long.
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x mt staff member | 24 Dec 2009 5:20 pm
they changed their company address from 279 to 247 tottenham court - this is because the company used to have 2 offices and this was merged into 1 once staff levels decreased.
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Santi Financial Limited - Mr Outhwaite | 29 Dec 2009 11:36 am
We’re a small, directly authorised mortgage brokers based in London EC1V. We're looking for experienced, entrepreneurial AR's to play an integral part in our business. We would welcome contact with xMT AR's. Where can we gain access to available AR's? The experience gained from the MT debacle must be learnt from. We aim to improve, indeed change mortgage broking through networks in 2010, prospering from MT's mistakes . There is a better, more profitable way forward for all in the mortgage network industry.
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Salil Chaudhari | 1 Jan 2010 11:06 pm
I escaped from their clutches. My instinct told me not to enter into any contract with them. I attended their seminars in London and passed all the exams. I really feel sorry for the AR's many of them really nice people working hard to earn a living.I sincerely hope they get justice.
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Salil Chaudhari | 2 Jan 2010 10:44 am
How on earth did the FSA allow them to carry on Mortgage business knowing that they were not treating their AR's fairly ?
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