By the start of 2003, all advisers will be part of a fully-qualified professional body, facing a stat-utory regulatory regime. They will also need their own trade body which can set standards; collate membership details; produce useful publications; research; and lobby the Government and regulators.
At the moment, there is no universally recognised trade body for mortgage advisers: IFA organisations such as SOFA and IFAA are not specific to mortgages. Of the trade body start-ups (such as NAMBA and UKAMP), neither is emerging as the leading proposition. The Intermediary Mortgage Lenders Association (IMLA) has seized the initiative and is now calling for an intermediary trade body to complement its own work with lenders who need strong, skillful intermediary and introducer support.
I fully support the sentiments expressed by IMLA ‘ in particular with regard to an independent and unbiased trade body to support packagers. However, we are aware of the problems that face such an enterprise and unless these major issues are confronted there can be no progress.
First is the question of vested interest. In any market situation, if one sector unites it will have more power to dictate favourable terms for itself. The ideal body should be much more than this kind of trade union. As well as setting standards and providing member services it should be a powerful voice to influence regulators and government ‘ not just a cartel of suppliers banding together to raise fees, which will have a knock-on effect on what the customer pays.
The next question is the diversity of size of members. Firms range from very large packagers to sole traders, so how can a democratic system be ensured?
There is an inherent danger of the larger packager and broker firms forming a premier league, leaving the smaller firms without any power or influence. We do not want a situation where the voice of the larger premier league players is heard at the expense of the Nationwide League. As in football, where a league is only as strong as its weakest club, larger packagers depend on smaller introducers.
But who is going to pay? Some lenders may back the scheme, but providing ongoing funds could be a different matter. The variety of potential member sizes is at the core of the problem. Smaller members ‘ who need a trade association most ‘ will be the least able to provide funding or the time to take on voluntary administrative duties. But the larger broker and packager firms ‘ who could better afford to contribute to funding a trade association possibly need it the least.
John Prust is sales and marketing director of SPML