Further evidence that brokers are still unsure about what to do as Financial Services Authority regulation looms came Mortgage Strategy's way last week.
A broker called up to pick our brains on how to choose a network, having spent the past few months trawling through the promotional literature to narrow his choice to two.
MS is not in the business of promoting one network over another but we did tell him to act now or risk not being able to trade come Mortgage Day. He decided his best option was to apply to both networks and then plump for the one offering the best overall deal.
Making multiple applications in this way is recommended by some networks such as The Professional Mortgage Network, but frowned upon by others, like Professional Mortgage Partnerships.
PMN goes as far as recommending that brokers consider submitting applications to at least three networks to ensure they are able to continue trading after October 31.
It warns that as many as 20 networks won't be able to offer full network facilities to members come M-Day so having a fall-back position would be a wise move.
It bases this warning on a view that, after its arrow visits, the FSA will impose such 'draconian' measures on some aspiring networks that many will not have the systems and infrastructure in place to cope.
In such a situation brokers will be out of business for at least a time unless they have a contingency plan in place.
But other networks such as PMP believe these stories will only scare brokers.
Its advice is to look for a network which has a solid financial base and a total commitment to meeting regulatory requirements.
PMP adds that brokers should join a network on the basis of transparency and commitment on both sides of the relationship.
This debate comes as the Association of Mortgage Intermediaries is warning that brokers who do not fully understand the FSA's rules for mortgage advice will face harsher penalties than ever after Mortgage Day.
All ARs and directly authorised intermediaries would do well to read AMI's factsheet entitled Guide to a Compliant Sales Process, published last week.
“Mortgage intermediaries perform a valuable service for their clients and should be looking to implement the new rules into what they do best, providing sound advice for their clients. This factsheet highlights the points that can help them to continue to do this,” says AMI director Chris Cummings.
“The FSA recently cancelled the permissions of 19 regulated investment firms for breaching its standards. With our own industry undergoing a major overhaul, firms that fail to make the necessary changes face the prospect of an equally unhappy experience,” adds Cummings.
Brokers should also read the September issue of MS supplement Network Strategy, out this week, which includes news and interviews from a number of networks, to find out what is happening in this competitive market.
Above all, though – whatever you do, do it soon. Time is fast running out.
Q: Do all networks offer a lead generation service?
Andy Valvona is network director at Mortgage Next
Not all. Many intermediaries have complained about the quality of leads. Remember that a lot of lead generation services are run off the back of web-based enquiries and the client must be contacted within an hour to stand any real chance of converting the lead into a deal. Many small intermediary firms simply do not have the necessary resources to deal with leads on this basis.
Bill Warren is network director at the Complete Network
No. Some will be offering this facility. Much will depend upon the network's approach to preventing non-compliance with financial promotions rules for example.
Chris French is managing director at the Mortgage Marketing Center
We believe that supporting appointed representatives with leads is a valuable service. We are investigating how we can achieve this in a compliant manner.
Elliot Stoneham is commercial and IT director at Pink Home Loans
Not all appointed representatives want a lead generation service. Many already have too much referral and repeat business coming in. One size does not fit all so at Pink we do not bundle lead generation and compliance services together – our customers can choose the services that best suit their needs.
Frank Thurlby is head of compliance at Genesis
A number of the networks will offer a lead generation service. The methods for generating leads, numbers and quality will vary from network to network. For example, some will use a web-based sourcing system to generate leads, others will place advertisements. You should discuss this with the networks you are considering and check that the leads that will be generated match your requirements.
Stephen Atkins is group compliance director at Freedom Finance
Many networks will offer this service but I would suggest that any appointed representative reads the FSA's implementation of the distance marketing directive before deciding that this is to be a part of their business plan.
Shaun Godfrey is sales director at Bankhall
No, and I do not believe it should be an important selection criterion as to which network you join as the network will not be concerned if you join a lead generation programme (as long as its is bona fide) because the more business you do the better. In my view this is a smokescreen and should be treated like one.
Nick Battersby is group compliance director at at Trustguard Credit Services
This would seem to vary according to the background of the network firm you are looking to join. Many of these lead generation schemes are in practice not as attractive as they sound. And the business actually completed and paid on as a result of the lead generation varies considerably.