Lead generation companies have become the life blood of some mortgage firms, providing an essential source of new business since cold calling was banned three years ago.
There are a number of excellent lead generation companies but as in any emerging market, there are also some that fall short of the mark and I have heard a few horror stories over the past few months.
For this reason, many networks have decided to give lead generation companies a wide berth, perceiving them to be nothing but a source of trouble and friction with members which they can live without.
After all, leads vary in terms of quality and quantity and it is difficult for networks to guarantee high quality service when they are dealing with such variables.
So it is pleasing to see that some brokers are taking the initiative. A number of firms have invested significant time and money in cultivating their relationships with lead generators to the point where they have needed to take on up to 20 additional brokers to cope with the extra business being generated. Impressive stuff. In fact, one firm says its main problem is no longer sourcing quality leads but sourcing enough quality staff – a nice problem to have.
Another initiative I’ve heard of involves a group of brokers who have get together to buy leads more effectively. Not only does this give the broker collective greater bargaining power, it also gives the lead generator a client worth investing in.
It can spend time understanding these brokers’ requirements and the arrangement seems to be working well for both parties.
The lead generation sector has had a mixed press over the past couple of years but is starting to emerge as a mature and credible part of the mortgage market.
As with many things in life, it requires an investment of time and effort to get worthwhile results out of the lead generation sector but based on the evidence I’ve seen, this effort is well worth making.
Get help to deal with IVA cases
On the subject of changes taking place in the market, another trend I have noticed is enquiries regarding sub-prime deals which involve individual voluntary arrangements.
The number of IVAs rose by nearly 24% during 2006, according to the Insolvency Service. What’s more, during the first quarter of this year a further 30,075 individuals entered into either bankruptcy or an IVA. With interest rates continuing to climb it is likely that these figures will continue to rise.
Dealing with mortgage applications which involve IVAs can be a tricky business, not only because of borrowers’ difficult financial circumstances but also because of the lack of criteria information regarding IVAs available on many of the sourcing systems. There is good business to be done in this specialist sector of the market but brokers need access to detailed information about products that cater for such borrowers.
Inevitably, our mortgage desk staff has developed a good understanding of what is available in this market. For brokers who only deal with the occasional application of this type it is difficult to build a similar level of expertise. But rather than telling clients in such a financial predicament you can’t help them, why not ask your network, club or packager if they can help? You may be surprised at the support available.
Let’s share data on rogue brokers
Since Mortgage Day, lenders have become more vigilant and sophisticated when it comes to detecting fraudulent activities carried out by brokers. The result is that lenders usually blacklist brokers so they are unable to submit any further business.
Lenders are understandably reluctant to talk about their procedures and share information on this, but there could be a good reason for them doing so.
Some firms that have been blacklisted in this way have set up again under a new name. We recently received an enquiry from a firm which the Financial Services Authority told us had been blacklisted by a lender. As we set about investigating the firm it changed its name and joined another network. No great loss, it turns out.
But this highlights the fact that rogue firms will find ways around the system so if the industry is serious about ridding itself of cowboys, it needs to be more willing to share information.
Heed the FSA’s warning on TCF
The regulator’s revelation that only 41% of small firms met its Treating Customers Fairly deadline means brokers have a fair bit of catching up to do.
The next deadline is December 31 2008. Although this sounds light years away, brokers must bear in mind that this is a hard deadline – by that date, all firms must have completed their TCF work.
Put the date in your diary in bold red ink and make sure your TCF programme is on track. The regulator says it intends to intensify its supervisory focus on firms that have failed to engage with TCF and will use enforcement action where necessary. You have been warned.