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Mortgage club sector ripe for disruption – Adviser Alliance

by: Martin Stewart, co-founder of The Adviser Alliance
  • 16/03/2018
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Mortgage club sector ripe for disruption – Adviser Alliance
Ken Dodd died recently. Did he? Come on, you all know the punchline, but his sad passing did remind me of one of his best jokes.


“I just read a book about Stockholm Syndrome, it started off badly but by the end I really liked it”.

I think sometimes the broking community itself can suffer from the malady that suggests long term captives can begin to trust and empathise with those responsible for their internment.

We have some very dominant voices in the mortgage sector who have been dining out on the same story for 20 years. There are bountiful myths which have, over time, become legend and are now so ingrained that many think they will find them in the Magna Carta.

It is easy to see therefore why change can be difficult to achieve if we are all chained to a radiator believing those that feed us are our friends.


Different beast

As Bob Dylan rightly observes, the times they are a changing and where there have been some huge improvements and innovation in certain aspects of the mortgage industry there has also been a lack of progress in others.

One of the areas ripe for disruption is the mortgage club sector – virtually unchallenged as a model since 1998.

I am totally supportive of the work undertaken by the clubs. In the early years they brought together a disparate army of brokers to aggregate them and make the distribution of mortgages that much easier for lenders. That certainly aided both ends of the food chain and helped make the sector what it is.

But it is a different beast today from the one of 20 years ago. And where we have seen huge progress in the professionalism of brokers, innovation from lenders and empathy from regulators, many advisers question why it can cost them £10,000 per annum to access their own income.



The Adviser Alliance would like to see more power over advisers’ income to be handed to the broker themselves. That is hardly a radical thought and we are not talking about insignificant sums of money here. The broker influences 80% of a £250bn industry. They should be the ones dictating the terms, and certainly not the ones being dictated to.

Seeing as mortgage advisers are the forefront of the advice process, it only seems logical to have them at the forefront of other things as well.

Our preference is to move toward a subscription based model where brokers simply elect to pay for services they need.

Just want access to your money? £50pcm please. Want access to a helpline and other ancillary support services? That will be £100pcm. Want the all singing all dancing package which comes with a pen, a brolly and a fortnightly cuddle?  All yours for £200pcm.

Populism is proving very popular these days so let’s have some in our industry.

If Brexit means Brexit, then why can’t procuration fee mean procuration fee? You absorbed the costs of client acquisition, processing, counselling and a lifetime of liability so is it really too much to ask to be paid fairly?

This becomes more relevant when you see the cost of being in business rising exponentially at a time when many procuration fees remain rooted at pre-2007 levels. There is a pay rise sat right in front of us all and it’s one that won’t cost the lender, client or regulator anything.

Ditch the radiator you’re chained to, trust me – you are more influential than you think.

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