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What do you think will be the role of mortgage networks in 10 years’ time?

Networks will provide brokers with the chance to build sustainable profits in an increasingly regulated industry, say our experts.

Payam Azadi is head of marketing at The Mortgage Times Group
Mortgage networks are still a relatively new concept and I believe we have yet to see their potential fulfilled, especially as the market becomes more complex and diversifies into uncharted territory.

The possibilities for network growth are evident and the extensive support and level of expertise that a thriving and well organised network can offer brokers can elevate a proposition above the norm.

Regulation will play a vital role in network evolution as more Financial Services Authority fines are imposed on rogue traders. Regulation in areas such as financial promotions is being toughened up, but if you are an appointed representative you will have access to expertise in the shape of a financial promotions officer who can deal with your queries. This is the sort of thing that is often overlooked when the pricing structure of networks is looked at.

As networks grow they gain considerable buying power and thus the ability to negotiate with product providers to get the best deals for their members. Benefits can also come in the form of discounts on personal indemnity insurance, again adding value to brokers.

Technology will also play a big part in network development in the coming years. Keeping abreast of the latest technological developments can ensure a network is stream- lined. If ARs are sufficiently equipped with the expertise to use the latest technology, regulatory requirements will be met and the network will thrive.

Brokers will look to join a network that offers them protection as well as a varied proposition. Networks that deliver on the promises outlined in their propositions as well as making sure regulatory requirements are met will prosper. Those that are unable to keep up with market evolution will disappear.

Alex Murray is group director of mortgage at Thinc Destini
Scale and security are the foundation stones of traditional IFA networks and, more recently, mortgage networks. Networks have always provided advisers with the chance to establish businesses one step removed from the regulator. They have also helped advisers come to terms with the practicalities of principles-based rules.

Regulation continues to put many advisers off seeking direct authorisation. This problem is addressed to some degree by service providers offering enhanced commissions and bulk buying terms. But these providers can charge hundreds of pounds to discuss best practice and FSA requirements specific to a firm’s circumstances without actually doing the job or even taking responsibility if their advice is wrong.

Many network principals recognise the risks involved in recruiting and supporting advisers who in some cases remain with firms for only a matter of months. They can leave problems in their wake for which the principal remains accountable. Within networks, vetting and referencing are carried out as a matter of course, as well as skills testing and process training. Responsibility for advice given remains with the network.

While benefits of scale in the form of commissions and discounted software can be offered by support services businesses, the security provided by a network gives advisers the opportunity to build sustainable profits while creating value which will not be offset against potential selling liabilities as buyers increasingly seek to minimise their risk.

While there will always be a risk of mis-selling accusations in the mortgage industry, networks will be there to support those brokers who wish to build their futures and their brands in an environment that provides the benefits of scale and security.

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