Some of the biggest headaches faced by advisers in the mortgage market are caused by competition and regulation, but more often than not by just trying to keep abreast of the latest developments in the market.
There seems to be almost no end to the number of external factors that conspire to prevent advisers from concentrating on what they do best ‘ providing sound financial advice to clients. However, the hard truth is that competition and regulation will not go away, and those who want to advise the public on financial products, such as mortgages, will have to tackle them head on, or else go out of business.
But doing something about this does not necessarily have to involve working all the hours in the day and spending more money than the competition just to keep above water, because support is readily available from a number of sources that advisers come into contact with on a daily basis. Lenders, packagers, mortgage networks and clubs, and not least, software companies can all be good sources of support and guidance, and many have specialist schemes designed specifically for mortgage intermediaries.
Somewhat surprisingly, the largest mortgage lenders in the country are not necessarily always those with the best systems in place to help intermediaries meet all the demands. Their sheer size and the number of advisers who regularly use them means it is not always practical to offer individual support all the time.
Having said this, there are few, if any, lenders who would not be able to offer some support when asked. It may be they are just not as proactive at volunteering help on an individual basis.
Ian Beggs, senior press officer at the Halifax, says: ‘In terms of support, we have 64 intermediary sales managers who are dedicated to managing all aspects of mortgage business, but most of this is liaison and relationship management. However, we also hold a number of marketing seminars around the country and sometimes we pay for a trainer to go to IFAs and mortgage brokers to help with training and compliance. This is usually done on a needs basis on a local or regional level, where we have been asked for help, or we feel that there is a need.’
A number of larger lenders have now got either intermediary sales or branch managers who have already sat the forthcoming exams and are willing to help with training and compliance issues. But while they can provide useful tips and advice they will not necessarily volunteer information unless asked, so brokers must be prepared to ask for help if it is needed.
Esther O’Reilly-Cain, media relations manager at Cheltenham & Gloucester, says: ‘At the moment, with the onset of regulation, we are in the process of getting all our branch managers CeMAP qualified. And some of those already qualified are acting as mentors to IFAs and mortgage brokers who are currently studying for them. A lot of branch managers have a regular tranche of brokers and IFAs who they help with their exams, but it is not an official thing.’
One alternative option may be to seek support from some of the smaller lenders who rely more heavily on business placed through intermediaries. Lenders such as Southern Pacific Mortgage Limited (SPML), which deals solely through intermediaries, can often be useful in taking on board the concerns of advisers and trying to ensure that regulation will be workable in practice. Stuart Aitken, director of mortgage credit at SPML, says: ‘Because of the GISC regulation that comes into force later this year, we are doing everything we can to make sure we are compliant for this and then for the Financial Services Authority’s (FSA) proposals. But our intention is to get out and talk to brokers and IFAs about the FSA and other regulation that will have an effect on them.
‘Many brokers are more than capable of doing this by themselves, and I guess we are not the only lender to offer help. But we are now sending out letters to our introducers to advise them on what they need to be doing and to invite any comments or queries they may have,’ says Aitken.
Going the mile
A number of these smaller lenders also have systems in place which go much further than support and advice over the telephone or at sporadic seminars. Eddie Smith, director of business development at Verso, says: ‘We have set up a library service where we can keep track of who has borrowed information. We have made all internal resources catalogues available on interactive disks, or as e-mailable sections and we have sent a lot out to interested brokers.’
Smith adds: ‘We can also put letters and declarations from brokers to their clients through our compliance team for them to make sure it is suitable. So when brokers write to clients about if they have thought about re-mortgaging they can be sure they will not be contravening any compliance rulings. It can be a nightmare for brokers with new regulation coming in all the time but we are working with it.’
Robert Clifford, managing director at IFA group mortgage force, says: ‘I do not think the bigger lenders offer much in the way of proactive support unless you are an agent of the lender. But this is not that surprising because the lender has no real obligations to IFAs. However, some of the smaller lenders cleverly use training and marketing support to differentiate themselves from other lenders. It is a way of giving added value because there are more reasons to do business with them.’
However, lenders are not the only source of support. Brokers can often find that software providers and packagers have developed sophisticated systems specifically to help advisers to remain compliant. Chris Baker, head of product management at Exchange FS, says: ‘We have a product, Advalorem, that is a suite of software modules available through a PC or a web interface, with interactive question sets on different exams and allows groups to monitor how training is progressing. Advisers can run sample tests from their offices and find out how they are doing, or large groups can use it to formally check that their staff are remaining competent.’
Technology providers are aware that brokers will often not have time to attend seminars and meetings, and it may be quicker and more convenient for advisers to learn while at work or in their own time. Clifford says: ‘The most significant change as regards support has been the extent to which technology can assist brokers in all aspects of work, not just at the point of sale, but increasingly in compliance.’
One of the most recent innovations in this area has come from Ifonline. The firm’s Compliance Shield system has been designed to allow brokers to remain compliant at all times when working through the sales process by ensuring the correct documentation is filled in before an application can be sent.
Richard Hurst, marketing manager at Ifonline, says: ‘Compliance is important for lenders and brokers. If lenders are going to be responsible for compliance, then the prompts are going to give them the confidence to accept that the broker has offered their product in a compliant manner. Brokers need something that is going to embed itself in the sales process. Rather than being a burden, compliance needs to become integrated.’
However, software companies are not the only place to find compliance software. Mortgage packager Pink Home Loans has developed a system that can be loaded onto a standalone PC by a CD-ROM and updated online. It has been designed to help with the extra work that needs to be completed to make sure a mortgage has been sourced in a compliant way. David Copland, sales and marketing director at Pink Home Loans, says: ‘The Compliance Wizard offers information on terms of business, product letters and all point of sale compliance literature and is free to brokers.’
But while compliance regulations are important, there are a number of other areas of support that brokers can access which can help with market positioning. Andy Young, mortgage network director at Zurich IFA group, says: ‘The essence of a mortgage network is to supply brokers with information and help with compliance, but we have also developed a lead generation process. We have linked up with a database company and asked them to identify potential consumers by giving them information about the typical remortgage customer. We can supply names, addresses and postcodes to brokers, charged at £1 per lead.’
Marketing is a key area for brokers, and there is almost as much support for this as for compliance. Those involved in the industry recognise that the more business advisers do, the better it is for everyone. Young says: ‘We have an advertising service. We have a portfolio of mortgage adverts to suit different media and all brokers have to do is adapt it to suit their offering and pay the advertising fee. The only costs we charge are to cover our own costs.’
Software providers are also involved in marketing support and some can offer cost-efficient ways of getting a significant presence on the web. Baker says: ‘In terms of marketing support, a lot of what we can do is based around the internet. We have a website template-building tool. But because there are thousands of brokers out there, it is unlikely they will score a lot of new business this way. So our advice is to focus on servicing existing customers.’
However, caution must be used when accepting a lot of help from a single commercial source ‘ especially from lenders. Clifford says: ‘If a company is offering a lot of help for free, it raises the question of where does the legitimate help end and the non-cash benefits that could influence brokers start. Brokers have to be careful not to be seen to be influenced unduly by help and support, and there could be criticism if a huge number of sales went via the source of help.’
Mortgage advisers have a wide array of support available to them which can be of great benefit in terms of training, compliance and marketing. But, while it should be welcomed, it should also be used cautiously and never be allowed to influence advice.
Many lenders have qualified staff who can help with training and compliance issues.
There are a number of electronic applications available designed to ensure that brokers stay compliant.
Marketing support is widely available and can range from lead generation to advertisement and website design.