Does the network you are considering joining have an adequate compliance team in place, staffed with people with experience of both the mortgage industry and dealing with the FSA? If the answer is 'yes' then this should be a significant contributory factor to your signing on the dotted line.
But there must be a secret army of top compliance people just waiting to unleash themselves on the market like superheroes if networks are to reach the numbers they want in their teams.
Mortgage Strategy has asked networks how many compliance people they have now and how many they want by October 31 and it seems the majority are in the middle of a recruitment drive.
One network is hoping to increase its compliance team to 20 from four, another is expecting to boost its team to 12 from seven, and yet another is looking for 20 when it currently has seven.
But where all these extra compliance people are to be recruited from remains a mystery.
“There are not enough people with an understanding of the culture of compliance and the mortgage market to carry out the function properly,” says Allen Swaine, chief executive officer of compliance consultancy SA Swaine & Associates. He explains that many mortgage firms will not understand the FSA's risk-based approach that IFAs have grown used to.
“One thing is that because mortgage networks are pretty new they have little idea of the FSA's compliance culture,” he adds. “I cannot see a glut of knowledgeable compliance people around by October who know the FSA and also have mortgage qualifications like CeMAP.”
And because the FSA has not set hard and fast rules on how many compliance officers a network should have in relation to the number of members on its books, the actual number could vary dramatically between organisations.
FSA spokesman Robin Gordon-Walker defends the regulator's stance, arguing its approach was never intended to be prescriptive.
“It does not work like that,” he says. “We say they should have an adequate amount.”
Before joining a network, brokers should check not just how many compliance officers a firm has in place but also its minimum standard of qualifications, as there is no regulation of the compliance people themselves.
“A big problem is that there are a number of compliance people out there who know nothing. The sooner they are regulated the better. Right now anyone can say they are a compliance expert,” warns Swaine.
But there are some real-life requirements to being a good compliance professional. First, they must understand the technical aspects of mortgages, which means having at least basic qualifications.
Second, they should understand the culture of compliance and know the FSA rules inside out.
Third, they should be able to apply the rules having gained some experience – ideally at least two years – working in the industry.
So on top of the other questions brokers should ask their potential network such as 'how is your capital adequacy?' and 'what is your record?', they should also grill them on their compliance officers.
Q: Do all networks provide a one-stop solution to brokers' needs?
Richard Griffiths is managing director at Network Data
Brokers' needs come in shades of grey. Some might want their networks to deal with pet insurance, for example. Your favoured network should be authorised for standard mortgages, lifetime mortgages and all classes of insurance associated with a mortgage sale. Other essentials are a reputable sourcing system and group cover for PI insurance.
John Lee is head of sales at Genesis Home Loan
No. Some networks have a small panel; some just focus on a particular sector of the market (sub-prime, for example). I suggest you write a checklist of your network requirements and use this as a reference in your discussions with the networks.
Dave Dodworth is compliance manager at Professional Mortgage Partnerships
No. Some networks are only offering specific services, e.g. mortgages only but not general insurance. Others have simply outsourced services to third parties. Brokers must define their needs to identify which network suits them best.
Ian McIver is managing director of the Whitechurch Mortgage Network
It depends on your definition of one-stop. As a minimum your network should provide you with compliance and T&C support. A definitive one-stop solution will always be pricing. You also you have to look at the autonomy a network will allow you – and indeed whether this is what you require.
Andy Young is head of mortgage services at Sesame
Not all networks will, but the bigger networks are more likely to. The most important thing is to check the total offering before signing up and to weigh the benefits of the charges and the procuration fees on offer.
Chris May is director at Mortgage Times
No. It is important that you research what is and is not available before you join a network. Only a few networks genuinely offer all ancillary products inhouse. Most will outsource their products to other companies so they are not true one-stop solutions.
Nick Battersby is group compliance director at Trustgurad C?redit Services
I don't think it's possible to answer for all networks. There are bound to be some differences in the services provided. Once again, an AR must look into things thoroughly before proceeding.
Richard Coulsen is director at Zurich Mortgage Network
Many networks will want to ensure that all their distributors' needs are satisfied with their network offering; others may want to concentrate on offering mortgage advice only. Of course, some networks will provide more breadth to their propositions than others and we will also see niche networks serving specific market areas. Also, a network can gap-fill using multiprincipal agreements but the general feeling is that it is better to provide a one-stop solution within your own network's parameters.