Mortgage clubs, franchises and networks are taking on an ever-greater influence in the mortgage industry, and the announcement of Mortgage Day, the day on which the Financial Services Authority (FSA) takes over as regulator in October 2004, can only enhance this further.
The costs of regulation are as yet undecided, but are thought to exceed current costs, and the need to remain compliant will take on more importance as statutory regulation moves closer ‘ perhaps pushing brokers towards such groups.
Such is the influence of these groups that they can secure enhanced products and procuration fees from lenders. With the amount of brokers they have access to, one thing is certain: the lenders have to listen.
And in a significant reversal of power, there is now talk of some concern among lenders over what would happen in the future if they were not on the lender panel of some of the larger groups.
Some of the larger advisory firms are also trying to get in this and are already thinking a number of the smaller brokers will not survive and be forced to sign affinity partnerships with them. As such, a number of IFA firms are making the news at the moment as they develop their own mortgage arms and clubs in preparation for this.
According to some, the only other options for those firms that cannot survive is to quit, or to join a club, franchise or network. But is this the case? While some may choose to join a larger organisation, it is not yet written in stone that there is no chance of survival in the post-regulation era for the average broker firm.
While there is nothing wrong with these groups ‘ many offer training and marketing support and a number will take on the compliance procedures, as well as offering enhanced product ranges ‘ it would be a sad day if the independent broker, working alone and efficiently, was lost from the high street.
There are plenty of benefits to joining a larger group, and it does not necessarily mean handing over your independence, but it should be made clear this is not the only option moving forward.