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First among equals?

  • 21/10/2002
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As mortgage regulation moves ever closer, Ben Marquand talks to Shaun Godfrey, sales director of IFA support services Bankhall and its mortgage arm Point One, about the rapid development among the mortgage networks

What are the origins of Bankhall?

Bankhall was set up in 1993, offering support services to the IFA market in the UK. It was set up in direct competition to, but is actually diametrically opposed to, the traditional networks.

If a member firm is an appointed representative of a traditional network the network therefore controls its authorisation among other things.

Bankhall thought the networks were too restrictive and decided to build an alternative. The proposition that Bankhall has built up allows the firm to retain its regulatory status and does not depend on us for authorisation.

How much of the market share has it captured, and what does it offer to IFAs?

Since 1993 Bankhall has grown to around 25% of the market. It offers a range of compliance, training and competence support, from compliance manuals, procedures for auditing, complaints handling through to product research, marketing assistance and technical helplines.

What happened to regulation in the 1980s and 1990s?

Between 1986, when the Financial Services Act came into force, through to about 1992 the regulators were working out what they were regulating. By 1992 they understood how to regulate the behaviour of the market and what was needed for consumer protection. Its focus then changed from being about what the firms had done to be about the training of those people in the industry. It took them a while to realise that it was a lack of education and training that mistakes were being made with customers, rather than deliberate attempts to mislead consumers. They spent a lot of time designing exams based around competency.

This is becoming more widespread and the Financial Services Authority (FSA) is encouraging individual product licensing, which is similar to the Mortgage Code Compliance Board (MCCB) at the moment. To advise on mortgages, brokers must have passed the required qualifications by the end of this year. It is the sort of thing people struggle with as well as writing business at the same time.

How did Point One come about?

Bankhall’s background was in life, pensions and investments, but as it grew it was frequently being approached by adviser firms, who had set up their own mortgage arms, for help with mortgage business. Initially there were queries as to whether there was a mortgage desk, which was duly provided, then there were queries as to whether there could be commission for mortgages in the same way as it was from life providers.

Bankhall then developed its own packager so it could control service standards. Then when the MCCB came about quite a few members were asking for help with the MCCB code of conduct and there was CeMAP and so on and the required training for the exams. It was realised that brokers were asking for an awful lot of help. At the same time, the regulator stated that in 2004 everything would be coming under the FSA and that was to include general insurance as well.

It was decided that Bankhall had been doing a lot of this work for its own members so why didn’t it formalise it into a separate company. It was a culmination of the help already been given to members over the last few years, spurred on due to the wider regulation for mortgage brokers.

What is the size of the packaging operation?

Point One packages for 15 lenders, but it was not the point to go into the packaging market. When we talked to some external packagers and asked if they would package exclusively for members, the issue they were not prepared to commit on, or if they did they were not up to scratch, was service standards. So a decision was made to do it in-house.

How do you differ from other broker networks?

Our proposition is unique. You can go to various groups that cover distinct services, but nobody has put it together the way we do. What you have is someone offering a network solution where they have to hand over control. But we still have the same issue with someone being an appointed representative as we did in 1993. It is a big decision for a firm to make.

With mortgage regulation will brokers be forced to flock to networks regardless?

We don’t think so. In the IFA market 25% of adviser firms are supported by Bankhall and they are all directly regulated and wish to remain so. In our opinion you do not offer people the opportunity of taking the liability away from them because that takes away control away from their business.

It is hard for the traditional networks in the life and pension side to maintain their size because they have to tell them what to do all the time. If advisers want to outsource some aspects that is fine, but it should not impact on their regulatory status. It is a myth to say that for safety you have to be part of a network to survive.

Ben Marquand is deputy editor

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