My objective was not to offend and when I observed that some brokers were ‘asleep at the wheel’ I wasn’t trying to imply that all brokers are dozing, simply that some are missing out on an opportunity to grow their income stream by not engaging with the sub-prime market.
It may have ruffled a few feathers along the way judging by subsequent comments but I think suitability shouldn’t be an issue if the client’s needs are correctly assessed. There are plenty of instances when a sub-prime mortgage from Magellan is a suitable and appropriate recommendation. Provided that the broker has documented his reasoning correctly, I don’t see the problem.
Which makes me wonder if there’s a deeper underlying issue here? Has the fallout from the credit crunch left brokers afraid to re-engage with any part of the market that they believe may represent a high risk?
To be honest, it’s an understandable concern. With claims firms trying to sue anyone for mis-selling anything from payment protection insurance to interest-only mortgages, it’s little wonder that brokers may see the sub-prime sector as a soft-target for over-zealous ambulance chasers.
But the reality is that selling a sub-prime mortgage shouldn’t represent a greater risk than selling any other type of mortgage product. They key is ensuring suitability. Which is precisely why I’m so keen that brokers advise on each and every sale of a Magellan mortgage, because vulnerable clients need independent and professional advice before committing to a loan.
There is a danger in this litigious age in which we live, that brokers start avoiding anything that they perceive to represent a potential risk. This would be a shame and a retrograde step for the profession. Consumers, especially those who have encountered financial difficulties, deserve support and by providing that support brokers can also tap into a valuable additional source of income.
Matt Gilmour is managing director of Magellan Homeloans