Mortgage brokers are being urged to remain independent and stay out of networks – by the chairman of IFA network Whitechurch Securities.
Kean Seager says mortgage brokers will be subject to lighter regulation than IFAs dealing in higher-risk business. This means that brokers can handle compliance themselves and enjoy cost savings by choosing direct authorisation over a network.
Seager says: “Where possible, I strongly advocate going for direct authorisation. This is for three reasons – maintaining your independence, maintaining flexibility and keeping costs down.”
While networks play a “vital role” in the IFA sector, Seager says: “It really is a different kettle of fish for mortgage brokers. CP146 makes it clear that the authorities do not regard the mortgage sector to be as risky as the investment and personal finance sectors. This means the FSA will take a lighter and, hence, more manageable approach.”
Limited panels of product providers, delayed commission payments and strict membership rules are among the network downsides that Seager points out. And he says: “Networks with hundreds or thousands of members can only offer efficient service if each of them sings from the same song sheet.
“Such rules do not feel comfortable for those of us who want to remain independent in terms of both business and attitude.”
Seager urges brokers to manage compliance themselves with the help of a compliance service. He says: “Your choice is to do it yourself, employ a compliance officer or employ a compliance service. The best route forward is probably to employ a compliance service. “