Procuration fees have again grabbed the headlines, with issues being raised that have been bubbling under the surface for the past year.
But this isn’t just a parochial debate; it is one that could have a major influence on the future shape of the intermediary community.
That applies equally to the future of large mortgage firms, along with the preservation of smaller firms who have for many years provided quality advice and customer choice.
What we are desperate to avoid is any prospect of the small intermediary being priced out of the market.
There have been suggestions from some commentators that on the back of the Mortgage Market Review and the Mortgage Thematic Review, the only people who will survive are the large firms, with smaller directly authorised firms being shoehorned into a network or forced out of the market altogether.
I, for one, do not believe that is the regulator’s intention. I have not seen or read anything to suggest that this new element of regulation is designed to eliminate the small intermediary. After all, if we wipe out thousands of intermediaries then who will look after their existing business and clients?
It is clearly important for the lending community to have a better understanding of the firms they are engaging with. But it is in all our interests – regulators, lenders, distributors and intermediaries alike – to have a healthy and stable market.
Each lender will interpret the FSA’s requirements differently, but it’s up to us as a major distributor to help them in formalising better relationships with those intermediaries, the vast majority of whom have excellent relationships with their clients and do a first class job in the advice process.
We are working closely with lenders to understand what they are looking for and how we can help. We are also using our compliance expertise to develop regulatory solutions for intermediaries to help them meet lenders’ requirements.
Last year there was a 10% reduction in mortgage advice firms. This is bad news for consumers, who need more access to professional financial advice, not less. Our group recognised this issue some time ago, which is why we launched The Financial Adviser School to help develop and nurture the next generation of professional advisers.
At some point the funding situation will improve. When this happens, mortgage intermediaries will be pivotal in helping lenders and consumers to build a sustainable and successful future market.
That is why all parties have a responsibility to take sensible long-term decisions.