Have you switched your energy provider recently? Findings published by MoneySuperMarket show that half of all customers have never moved from their first provider and as a result are paying almost £400 a year more than they would do had they switched. It seems ridiculous doesn’t it? Wasting all that money just because you haven’t taken the time to review your supplier and check it’s still the best option for you. Yet the same thing is happening within the financial services industry.
I’ve worked with mortgage brokers for many years and I know one thing for sure – they are a loyal bunch. They’re loyal to their customers, to the lenders they work with and to their colleagues. This is a business based on relationships and loyalty counts. However, there is no point staying loyal to a supplier that is not rewarding that loyalty. If you’re not regularly reviewing your suppliers you could well be losing out.
There is a tendency for many brokers in this business, particularly the more experienced ones who’ve been in the industry a while, to take the view that ‘it’s always been that way and therefore there’s no need to change it’, but such complacency can be risky.
If you stick with a supplier out of loyalty or apathy you could be losing out on much higher commissions. Worse still, you could be working with a firm that no longer treats their customers fairly or correctly. The term ‘guilty by association’ holds water. If a partner firm is not doing right by clients, this will eventually reflect badly on you and you may end up losing valuable business as a result of third party issues.
Choosing your partnerships based on who you get on with can have some merit, it’s useful to have an open and honest working relationship and if there is already a friendship foundation this can help. However, it should not be the determining factor and certainly shouldn’t be the reason you stick with a partner that is no longer the best option.
Reviewing your partnerships is not just beneficial for your business, it can also help you to meet compliance requirements from the FCA. The regulator has spoken about the need to perform adequate due diligence of third party partners several times.
As a general rule brokers should find a way of making a formal review of suppliers once every couple of years at a minimum to ensure they have the best of breed supplier for each product set.
One of the most common reasons, or perhaps excuses, when I ask brokers why they are not doing this is that they don’t have the time. I understand this, don’t get me wrong. Anything that takes time away from the core business of selling mortgages is deemed time wasted. However, the reason I class this as an ‘excuse’ and not necessarily a valid reason, is because it is possible to outsource this type of due diligence work to others. There are many consultants in the market who will carry out a full audit of your suppliers and recommend more suitable options where they exist.
If you undertake the due diligence yourself, keep accurate records of the work you do as evidence.