Continuing my look at the three key values of a successful network – choice, control and continuity – this week I focus on control.
A network must, in order to justify its existence, provide certain services to its appointed representatives. These are training, a sourcing system, a strong panel of lenders and insurers and compliance monitoring. But just how much control do networks exercise over these activities?
With regard to training, most networks seem to have signed up to the facilities provided by the likes of Competent Adviser and Mortgage Assess, although it is left to the network to supervise the training and ongoing assessment of its ARs, including the sitting of appropriate examinations.
On the software front, networks such as Mortgage Intelligence and Network Data have invested heavily in developing their own systems. Most networks, however, buy in these components, which no doubt saves money in the short-term.
But you have to query how much control these networks have over the quality of these components and the speed with which changes could be implemented.
Taking the sourcing systems as a prime example, HomeLoan Partnership uses the Encore system supplied by its largest shareholder, Mortgage 2000, while Network Data maintains its own mortgageLink system, now in its eighteenth year of operation.
All other networks rely principally on Mortgage Brain or Trigold, with a couple using the Homebuyer system.
Last week's Mortgage Strategy contained the headline 'Broker says Trigold KFI is incomplete' with Bill Safran of Trigold commenting: “Our KFIs have been thoroughly reviewed and we are confident that they meet FSA requirements”, while 10 pages later another headline runs: 'Trigold problem still not fixed', with Safran now saying, “I am confident that any issues will be fixed by Mortgage Day”.
So within the space of 10 pages the story changes from “confident that everything is OK” to “confident that things will be fixed by Mortgage Day”.
For those networks reliant on Trigold, does this fill them with confidence? If I was in their shoes, I'd be worried.
Most networks, except the likes of Enable have their panel of lenders, with numbers ranging from around 20 up to 80 plus for Sesame and Network Data. Enable says it has no panel and that its ARs are free to place a mortgage through a club such as Premier Mortgage Services or The Mortgage Alliance.
At least Enable is being honest, making no pretence of any degree of control. It is as though the issue has been pushed to arm's length and beyond. ARs will be left to key into the KFIs the procuration fees they receive and presumably show the £25 case fee charged by Enable.
On insurance, we see the flip side of this with most networks reliant on third parties such as The Source or Ceta that bring their own panel of insurers to the table. Network Data is one of the few networks to have developed its own panel of insurers but this gives it a high level of control in maintaining the balance between the household, payment protection and term assurance products on offer.
It also means the KFIs produced by the mortgageLink system are automatically populated with insurance premiums as required by the Financial Services Authority rules.
Compliance is a core feature of the FSA regime and most networks have appointed a dedicated compliance director. However, there is almost total silence regarding the number of field compliance officers within each network and the span of their control over their AR communities. There is little evidence of this function being outsourced although there are a number of specialist firms that can provide the quality of service required – at a cost of course.
Prospective ARs reading this article may feel that it is the network that will face these issues and that they are somehow immune from potential problems. Not true.
The ARs are the foot soldiers of the network and it is vital that they are fully supported in their endeavours at the front line.
A network not in control of its own destiny is not going to be able to provide the required support.