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Prepare to be judged by quality of clients

With the recent announcements that lenders may price on quality of business received, advisers may have to face an uncomfortable truth that they could be judged negatively if they have the wrong type of client.

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Most of us, and lenders are no different, want to work with people who are going to help their business and make them money.

While lending is tight and lenders are under increasing pressure to up build their balance sheets, they are potentially in a position to cherry pick the high-margin business they want and the advisers who supply it.

The mortgage business that a lender wants is usually high-deposit with a low risk of default.

Therefore as an adviser you could be at risk if, for example, you only have clients who can put down the minimum deposit.

Your business may not default, but the business you place might potentially not classify as high margin or therefore high quality.

Similarly, you may need to consider where and how you place your business.

For instance, let’s say you place all your top-end, low-LTV business with one lender, but all your lower end business with a different one.

It is possible that while the lender with your high-end business loves you, the one who has the rest may decide that it no longer wants to work with you.

It is certainly something to bear in mind as the battle for quality business hots up over the coming months.

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