Mortgage Intelligence's decision to offer free access to its network services is to be applauded. Why? Because sense is at last starting to prevail among the leading players of the fee-charging mortgage network world.
Let us not underestimate just how important Mortgage Intelligence's strategic U-turn is. This is an act that will have far-reaching consequences for other fee-charging mortgage networks. At last their united front has been broken – and by one of the biggest and most respected names in the business.
The penny appears finally to have dropped. Certainly MI managing director Sally Laker realises that navel-gazing won't pay the wage bill come Mortgage Day. Others, I am sure, will twig this too and follow her lead.
Laker cites a lack of members signing up to MI's network propositions as the driving force behind her U-turn. This is not the consequence of an unforeseen calamity that has befallen the fee-chargers in recent weeks. Major doubts as to whether fee-chargers will prevail have been around from day one, as have reservations about the future prospects of the free networks.
And the fee chargers have largely been responsible for leading the general debate about the future of the network industry. Perhaps now the 'frees' will get a greater shout in the media on strategic matters and wider policy issues.
From our point of view we have declined 60% of enquiries because prospective ARs have not met our membership criteria. I have no doubt that these people will find good homes elsewhere but from what I have heard, the situation is much the same for other networks.
I visited the recent Mortgage Expo in Manchester, where I was pleased to see the stand of Professional Mortgage Network besieged by advisers eager to find out more about the risk-averse PMN proposition. The same could not be said for the stands of PMN's fee-charging rivals. If you believe the spin, PMN shouldn't be getting a look-in. It's a new kid on the block. It doesn't have audited accounts and I'm sure it doesn't have millions of pounds in its bank account. But PMN has got a strong and robust proposition, one that clearly positions the member at the forefront of its strategic thinking.
The perception I have of the fee chargers is that they think their names are enough to attract large volumes of members. It's wake-up time. It seems that few of the 40 or so dedicated mortgage networks have healthy balance sheets and those that have don't want to fritter away their hard-earned reserves in pursuit of a folly.
Mortgage Intelligence is one of the most prudently-run organisations in the sector and has the backing of the mighty Close Brothers. So if MI has to back away, albeit temporarily, from pursuing its fee-charging policy, what does the future hold for the others?
You only have to search the archives at Companies House to find out that the finances of most mortgage networks are not as strong as many would have you believe. Only Pink, Mortgage Intelligence and The Mortgage Operation clearly emerge as having the capital adequacy standards demanded by so many of the fee-chargers. The rest have all either made losses, have minimal cash in the bank, or have few or no assets. This means that the majority of mortgage networks fail the test advocated by the fee chargers – that an AR should only join a network that has a strong financial infrastructure in place.
In my opinion, only the gang of three mentioned above meet this standard. Therefore, sure as night follows day I am confident that the remaining fee chargers will look closely at what MI is doing and change their policies accordingly.
Free network membership will suddenly become the order of the day, and even though Laker says MI intends to charge fees post-Mortgage Day, she may be forced to reconsider this position if ARs continue to be unimpressed with her network's advances. And quite right too.
Such a move will bring the debate to the sensible position whereby ARs will be able to look at the strength of the overall network proposition on the table rather than whether a network will be able to afford to pay its electricity and telephone bills in two years' time.
This is the position I have been championing for the past nine months. It's true that we don't currently have the cash resources of Pink, MI or indeed TMO but we are a professional organisation that is run prudently and solvently. And we believe it is the quality of the services that are on offer that are of paramount concern to prospective AR members. If the services are good and deliver added value the network will be strong. Anything that falls short of the mark will rightly fail to attract members.
Mortgage Intelligence has paved the way for the real debate and there's little doubt there will be an intense struggle between the networks between now and Mortgage Day to sign up the members we all need to make a decent living.