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Editor’s note: The new War of Independence


The battle lines have been drawn as the issue of independence reaches the mortgage market.

“In providing independent advice, a firm should not be restricted by product provider, and should also be able to objectively consider all types of retail investment products that are capable of meeting the investment needs and objectives of a retail client.”

Thus spoke the former FSA six months before it introduced the Retail Distribution Review for IFAs. The independent versus restricted debate was fiercely contested and firms took pride in demonstrating they could consider the whole of the market.

The mortgage market has not had to confront such an issue – until now. As part of the Mortgage Credit Directive, which comes into effect this month, the second charge market will become regulated. The rules state that, where a client wishes to increase borrowing, they must be made aware that a second charge loan could be more appropriate than a remortgage or further advance. Brokers do not have to advise on seconds but, if they choose not to, they cannot describe themselves as ‘independent’.

In an ideal world, this would be a straight choice between providing advice on seconds or not. The issue, though, is that some networks have taken the choice away from their ARs by insisting that they do not provide advice on second charge loans and instead refer cases to a master broker. Some of the network chiefs this magazine has spoken to over the past week underplayed the importance of forcing their ARs to refer second charge business. Many insisted they had few firms that used the word ‘independent’ in their name.

But this misses the point. As in the IFA world, there will be brokers who pride themselves on being ‘independent’ – whether in name or when talking to customers. Of course, they could use another term to describe themselves, but the word independent has become a byword for impartiality.

The issue has also split the market down the middle, with DA firms having the freedom to decide their own destiny.

It would be no surprise if those networks that have given their ARs the freedom of choice use this as part of their recruitment strategies.

The battle lines have been drawn and the issue of independence has finally reached our shores.



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Jelf Employee Benefits discusses the legislative changes in Dubai, available medical facilities and policy considerations for employers with expatriate workforces in the country. This edition will be of particular interest to global human resource directors, compensation and benefits specialists and mobility managers who have employee populations in Dubai, or are considering operating there in the near future.


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  • Chris Hulme 1st March 2016 at 3:41 pm

    The reality here is that lines are blurred on what being independent really means.
    Just because an adviser doesn’t advise on seconds it doesn’t mean he wont consider the importance of them as a viable solution for the client. I consider the second market where it is appropriate to do so and will refer clients to a specialist in that market where the need arises. In that way the client gets the best possible advice from myself and the broker advising on the second. The only difference here between independent or not will be the name of the broker that actually transacts the advice and application of the second itself. My client will still be looked after properly.

  • James Mather 1st March 2016 at 1:15 pm

    We regularly get telephone calls from advisers wishing to use our product only for them to be told by their Network Principle that,” The company is not on our panel”.
    How anyone can purport to be independent when the range of companies they can recommend is limited by a third party is anyone’s guess.
    When we approached one particular company, they said that they are a few years into a 5 year deal with one particular provider of our particular product. How can it be best advice to only recommend one product because that is the only one in your portfolio?
    The sooner Appointed Representative Networks allow their members to be the ones to decide which products and providers they recommend, the better. So far, in our research, we have only come across 3 of them.