History is not a good indicator of quality

Over the past few weeks, there has been a great deal of discussion about the reduction in proc fees and the move by lenders towards quality distribution.


Some lenders have said they will no longer reward networks on volume of business, only on quality.

With increased Financial Services Authority scrutiny and a focus on mitigating the risk of a future credit crisis, the market was bound to shift in favour of quality.

Networks focus on compliance, so they have their own procedures in place, which complement those of lenders. One would assume that directly authorised firms also work to a disciplined compliance culture.

A thorough sales process ensures advisers know their clients and you need to know your client before you can choose a lender. Finding a lender and then making sure the client fits its criteria is back-to-front and not good practice.

Lenders do not have an easy task benchmarking quality. Using historical data would seem to be their main focus, especially concerning arrears cases. But as the investment health warnings always say, ’looking backwards can only ever be a guide’, and present and future performance may vary.

Judging an adviser on a mortgage placed three years ago, that fitted criteria at the time but went into arrears because the client lost their job, would seem harsh so I hope further investigation would follow.

As long as lenders and networks work together, one hopes the correct decisions regarding adviser quality and behaviour will be made in every case.