View more on these topics

Comment: Handle referrals with care

Payne-Nigel

There is a potential regulatory gap when a distributor cannot compare or take responsibility for advice across sectors

When you refer clients to a specialist distributor, you want expertise you can trust. There are a few firms with the experience, size and scope of business to offer a proper service; and then there are the dabblers.

Some of these may have slick websites but how many cases are they actually dealing with and across which sectors of the market?

A firm needs sufficient volumes across all non-standard sectors to have up-to-date knowledge of the markets, the latest products and lending criteria, and, of course, regulation.

You may be surprised to learn that some distributors consist of just a handful of people who share a small office. So what happens when one of them goes on holiday or gets sick? Service, administration or compliance can slip.

Even more of a concern are those that operate in only one area of the market, particularly where a client would benefit from a product search across sectors.

Say you suggest a second charge to a borrower and refer to a second charge master broker. It finds a great deal on a low rate that compares favourably to a remortgage. All well and good.

But what happens if that case is rejected? It should be sourced again across remortgages and seconds. But if the master broker does not deal with remortgages, it may simply cascade the case to another second charge lender that will accept it – in which case a remortgage might have been a better option.

The initial broker is not responsible for the advice because they do not have permissions for seconds and they referred the client. The seconds master broker deals only in seconds, so will it pass back the client and lose the business? Is it obliged to?

There is a potential regulatory gap when a distributor cannot compare or take responsibility for advice across sectors.

Think carefully about the firm you plan to entrust your clients to. It is your reputation, and potentially your client’s home, at stake.

Nigel Payne is managing director of TFC Homeloans

Recommended

Bank-of-England-BoE-Clock-700x450.jpg

BoE votes to retain current interest rate

The Bank of England has hinted it may not cut interest rates further before the year’s end as it unanimously votes to keep rates on hold at its November meeting today. However, it has warned the possibility of a ‘hard Brexit’ presents challenges ahead and forecast that unemployment will rise to 5.5 per cent, while […]

Rental-Contract-Pen-Paperwork-Mortgage-700.jpg

Rental growth to outpace house prices, says Savills

Rental growth is set to outpace house price rises and property sales are likely to dip by 16 per cent over the next two years, Savills has forecast. The estate agency predicts that economic uncertainty as the UK negotiates its exit from the EU over the next two years will trigger very low house price […]

Curran_Peter_Countrywide_2015

Curran Affairs: Lenders feel the need for speed

Customers are losing out on the expertise and knowledge of brokers when they opt for a 30-minute mortgage application Managing our lives online brings enormous benefits, so it is no surprise lenders are using speed as their latest unique selling point. There are those that would rather focus on the ability to apply for and […]

Keep calm and carry on?

We British are known for our stiff upper lip and just getting on with things. It’s part of our quirky cultural behaviour – like forming orderly queues, or saying sorry when it’s not our fault. Many of us just aren’t that great at talking about what’s bothering us. But if someone feels that the stresses […]

Pension - thumbnail

David Cameron appoints former adviser to Tony Blair as new pensions minister

Following a cabinet reshuffle in light of last week’s general election, David Cameron has announced that Ros Altmann will be replacing Steve Webb as pensions minister. As the industry works with one of the largest reforms to the sector in almost a century, the former adviser to Tony Blair has been tasked with ensuring that the pensions revolution does not stray off track.

Newsletter

News and expert analysis straight to your inbox

Sign up