For now, put the Champagne on ice
In response to the article “Networks vying for ARs? Great
When I read Robert Winfield’s article in a recent copy of Mortgage Strategy about networks competing for ARs this article I was left open mouthed. If the purpose of writing articles was to gain a response then this one certainly did!
Robert pointed out that he had heard of some “fantastic one year deals for ARs to switch networks” and that this was a sign that confidence is returning to the sector and a sign that brokers can soon start “sipping fizzy wine on the road back to the champagne lifestyles we used to enjoy!”.
It is hard for me to find any part of it that portrays our business in a good light. It was for all of these reasons that businesses failed previously.Why do you think networks went under in the past? It was because they were chasing advisers offering ridiculous deals and hoping for growth off very small margins, with an exit strategy of selling AR numbers on to a larger company, which of course never materialised.
So why on earth would anyone move networks for a short term deal now when they should be looking for long term stability? Networks have to rebuild trust, and AR’s should be wary of being used as a pawn in someone else’s game.
I would imagine most advisers are looking at the current market as a way of restoring their savings and paying off business loans, not contemplating the champagne Charlie syndrome of the past. A more buoyant market is long overdue, off the back of pent up demand, but it should not be an excuse to let the good times roll!
Our industry is constantly changing and before anyone gets over complacent, MMR will change the landscape we all work in. Mortgage broker’s credit ratings with the lenders will only become more important in the coming months and quality business will increase your stock more than offering volume mortgages to strike a better deal.
I am pleased to see the response to the article was more of disbelief than anyone enhancing the points made. We should not take this market for granted. We all have a part to play to make sure we keep the business coming into the intermediary channel and prove to both clients and lenders alike that we can be trusted to keep quality at the heart of our business models, and let the commission follow not lead our uppermost thoughts.
Mark Graves, director of Pink Network
Help to Buy is building up trouble for the future
I agree with the Adam Smith Institute that the Government should scrap its Help to Buy scheme, as reported by Mortgage Strategy last week.
This scheme is not enabling people to step onto the housing ladder. It is leading to people purchasing properties that would otherwise be out of their price bracket.
For example, the three-bed house a borrower was going to buy was perfectly acceptable but why not get the four-bed as the government are making up the difference? The issues will start in 20-30 years time when loans can not be repaid.
Name and address supplied
Bubbles of the past show the scale of the present
I was interested to read that broker and lenders both hold the belief that a house price bubble is the biggest threat to the success of the Government’s Help to Buy scheme.
The evidence is there from past government intervention in the housing market. When they withdrew MIRAS and had a stamp duty holiday it created a bubbles by bringing forward transactions that would have a happened in the future.
This time the bubble will be larger as it will bring forward transactions but also release the pent up demand from the last five years of people being unable to move.
Current buyers are indifferent to the impact of MMR
Last week I read an article where Legal & General director of housing and external affairs Stephen Smith said he believed the ban on non-advised sales coming in as part of the Mortgage Market Review is the cause of a recent increase in intermediary lending.
I was left feeling the article was a classic case of trying to create a story which is not there, then seeking to find “evidence” to substantiate their “facts”.
Current buyers are both indifferent and ignorant to the impact of MMR right now, as there has been little mention of it in the press and it is too far off in the future to matter to present sales activity.
The most likely driver for this increase is the impact of government initiatives to assist first time buyers and they are turning to brokers to seek out the best deals for them.
Lenders are faced with a real need to find ways of reducing the costs of sales associated with compliance. My assessment is that there will be greater investment in non-interactive channels, such as via web.
I would agree that there may be a short-term swing towards brokers post MMR as the market adjusts to the new regime and lenders build confidence in their newly qualified advisors.
However, to suggest that the costs associated with training branch and call-centre staff would be so great as to drive lenders to put more business towards brokers in the long-term needs to be tested.
At this rate, there will be no financial services sector left
In response to Channel 4 economics editor Faisal Islam’s assertion that brokers were the driving force behind the credit boom witnessed before the credit crunch.
When I was a kid (very many years ago, but yes I was a kid once) the 1950’s was a very different world to the one we see today. As was the sixties in my teen years – I must have been there too as I “cannot remember it” as the saying goes!
Today’s world is now a complicated, highly regulated, automated, risk averse, all blame, all claim, sometime cynical and very expensive place to live and work.
The public perception of the financial services industry today, partly of it’s own making and very partly due to failed regulators and regulation over many years, is seen as a version of mafia run Las Vegas in the fifties and while all this is going on we see a nanny state hell bent on creating rules and laws that are mostly unenforceable or go unenforced.
Today, financial services is being subjected to the genetic remodelling of its DNA to remove forever the gene thus ensuring consumers may never lose out- ever, irrespective of merits.
If we carry on the way we are there will be no financial services industry left and no incentive to innovate, enter it or develop new products. It will be destroyed by a sterilizing regulatory radiation cloud emanating from Canary Wharf and not Brussels, as David Cameron would suggest. And Faisal would not have anything to write about
Firms should value, cherish and appreciate the wealth and success a well-run business with happy clients can bring. Regulators should concentrate on those that do not and learn to recognise that blame should sometimes sit at their door, or even that of the “consumer”
Derek Bradley, chief executive of Panacea Adviser
Faisal Islam is right but also very wrong
Sadly, Faisal Islam is right that some brokers were a driving force for the problems, but to tarnish to whole broking community is the real offence in his comments.
During the boom, many brokers were using all the gaps in underwriting to earn as much as possible with little regard for the rules or their clients.
Fortunately, the bust put almost all of them out of business, so his comments appear levelled at the current broking community who are, by and large, the honest ones and hence why they continue to trade.
It seems popular to make blanket statements and so undermine entire professions based on the misdemeanors of a few. For example: “all politicians fiddled their expenses” and “all bankers are to blame for the crisis”.
If Faisal’s full article does not qualify that his comment relates to but a small part of our community which is no longer in the business, then I suppose I might say to him “all journalists should not be believed”.
Islam opinion is misguided
What a ridiculous and misguided opinion from Faisal Islam. I can 100 per cent assure him and the rest of the readers that the driving force behind the bubble was undoubtedly the lenders.
How did UK brokers make the same thing happen in the USA? – they did not, it was the lenders.
The lenders’ way to market (here and USA) and to maximise lending was very often through brokers, some of whom certainly did not operate to the professional level that we would like but certainly were used and incentivised by lenders to enable maximum lending.
The fatcat earners at the banks and financial institutions drove the market and the greed of some brokers, buyers, sellers and agents all compounded it.
Name and address supplied
They would rather trust a meerkat than a salesman
There were a number comments left by readers on the recent story about protection advisers warning that poor protection sales figures for the first half of the year look set to continue.
The story reported that a combination of more expensive premiums as a result of the gender directive – which at the end of last year banned providers from charging different premiums for men and women – and a fall in adviser numbers as a result of the retail distribution review will lead to a smaller market, they warn.
And Highclere Financial Services partner Alan Lakey said: “Any adviser with half a brain did a lot of business last year to beat the gender deadline. The potential for rebroking has been minimised because of gender because of the premium increases.”
But premium should never be a problem as insurance protection in the UK is fantastic value for money. I have just insured two pensioners to age 90, one diabetic, for a very reasonable premium.
Online distributors are the biggest threat as every one thinks they can get a better deal by doing it them self even though they don’t know the contracts.
They would rather trust a Meercat than an insurance salesman or adviser. It is the same for travel agents, car brokers and so forth.
To those in the industry warning that poor protection sales figures for the first half of the year look set to continue, how about the protection companies spend some money on hard hitting advertising on television portraying the actual need for protection instead of blaming brokers for protection apathy?
Protection is really difficult to sell at the moment because of all manner of things. I wish the people who blame broker apathy actually tried to sell protection themselves instead of sitting in their ivory towers spouting nonsense.
Name and address supplied