I have no doubt that this finding will eventually lead to a number of sole traders and two-man bands joining mortgage networks.
It seems clear from both this report and the one issued prior to Christmas in which the regulator rapped more than 200 firms on the knuckles for inappropriately advertising sub-prime mortgages, that small firms are continuing to find it difficult coming to terms with working in a regulated market.
This is hardly surprising when you think about it. After all, there is a lot for them to come to terms with.
They have got to keep up to speed with an evolving set of regulations as well as the fresh drive towards principles-based regulation.
They also have to ensure that they have good office procedures in place, that their records are kept up-to-date, that staff are trained and monitored and that clients are provided with all the appropriate paperwork.
Furthermore, costs have in-creased, the market is slowing and income is under pressure.
It must make sense for small firms to consider joining networks from where they can access a broad range of support services. This would free them to get on with the job in hand – providing clients with advice.
And those brokers who are adamant about remaining independent can at least lean on mortgage clubs to provide some of these support services.
Clubs and networks must therefore be rubbing their hands with glee right now – never has there been a better time to mount a recruitment drive.
But before networks start booking the advertising space and working up their mailing campaigns, they should give some consideration to what brokers are after.
Yes, brokers want competitive products, decent proc fees and high quality service, but that should all be taken as read. If networks and clubs can’t provide these, they don’t deserve to be in business.
It’s the added-value bits that really matter – the services brokers don’t have time to sort out for themselves but which help generate more income.
Home Information Packs are a good example of such a service. It’s clear that brokers are doing nothing to prepare for the onset of HIPs. Researching suppliers and preparing training and promotional material is simply not on their radar screens yet.
But come June, most intermediaries will want to capitalise on the income-generating opportunities which HIPs will deliver.
This is an ideal role for networks and mortgage clubs. They should be able to hand HIPs to brokers on a plate.
Their offering should include a range of suppliers, competitive tariffs and commissions and support with training and sales.
Judging by the discussions I have had with a number of networks they are still some way from providing such a service.
There are only four months to go until the launch of HIPs. That’s less than 100 working days. If you are an intermediary and you belong to a network, you should ask it what it is planning to do to provide you with support.
And if you’re thinking about joining a network, make sure you find out about these value-adding services as well as comparing pricing, product ranges and proc fee payments.