Mortgage franchise network mortgageforce has revealed it is close to signing a deal with a national IFA firm that will allow it to offer appointed representative status to brokers.
In contrast to most of the other operations that are planning to apply for principal status next year, it has decided not to set up its own compliance department but to use the facilities of an existing brand.
Rob Clifford, managing director of mortgageforce, admitted: ‘We are looking at a joint venture with two potential partners, and which one is chosen depends on which will help the firm to achieve its goal of becoming one of the top three mortgage solutions providers in the UK.
‘The advantage for us is that this could provide all the technical and compliance support needed under the Financial Services Authority without the costs that other similar firms will incur by doing it themselves. In addition few of the mortgage networks that are planning to offer appointed representative status have existing compliance expertise let alone a compliance director.’
However, Mark Charlesworth, managing director of The Mortgage Operation (TMO), which also plans to offer principal status, commented: ‘The margins from mortgages have historically been less than those in life and pensions, and most IFA networks have been losing money providing compliance support anyway, so I do not think it is feasible for them to make a profit from taking responsibility for mortgage compliance too. Most solutions will therefore have to be systems-driven although I agree that a lot are not taking it seriously.’