This week has seen the official launch of a new mortgage club, The Adviser Alliance, which was borne out of broker frustrations with the way the mortgage market currently works, according to founder Martin Stewart of London Money.
The model is certainly different, with brokers enjoying the “maximum possible procuration fees” plus a profit share on placed business, with the club instead charging a subscription fee to brokers.
Mark Dyason, director of Edinburgh Mortgage Advice, said that for DA brokers it was good to see someone else “go in to bat” for them, and suggested that other clubs and networks will need to sharpen their offerings to ensure they offer real value to their ARs and DA members.
He continued: “I expect to see significant change and it is great to see someone challenging the status quo. The best networks help deliver what their member firms aim for; this isn’t always just a few basis points more on each deal. But for those networks that don’t deliver, the broker will ask ‘why am I here?’ and now it seems the grass may well be much greener on the other side.”
Rachel Lummis, mortgage adviser at xpress mortgages, said that it was a “breath of fresh air” to see a different approach, arguing that for far too long brokers have been faced with a range of clubs that offer much the same thing.
She continued: “An annual subscription as opposed to a cut on each case just gives the brokers more choice and it’s been long overdue. I wonder if other mortgage clubs will suddenly start offering the same approach, maybe different levels: bronze, silver and gold club memberships perhaps, with varying member benefits so it suits the smaller and larger brokerages throughout the UK.
“This can only be good news for brokers; the broker market has grown significantly and maybe clubs have been complacent and now need to fight to attract brokers to their clubs and reward them for loyalty.”
David Hollingworth, associate director at L&C, said that mortgage clubs need to offer a “tangible benefit”, whether in terms of the commercial terms or the products on offer, in order to win favour from brokers and pointed out that the market will tell us soon enough if a subscription model is viable.
He continued: “A flat fee approach will be appealing to some brokers, as they know exactly what they are getting into in terms of cost from the outset. They can then judge whether that’s a cost they are willing to take on. Some big names will be watching closely how The Adviser Alliance does; it shows that people are prepared to look at alternative models, and there should be room to do that.”