Speaking at a Pepper Money roundtable Adam Hinder, managing director of Simply Adverse, claimed many advisers were reluctant to refer cases when it came to clients with adverse credit as their pride got in the way, however, brokers who spoke to Mortgage Solutions suggested this was not the case.
And many have set up significant informal arrangements with their trusted colleagues.
Open chain of communication
Lawrence Robbins, partner at A Mortgage Now, says he has a referral system in place and whether he referred an applicant to a large or small brokerage would depend on the type of case it was.
Citing that this has been the case for 15 years, Robbins says he is always honest with customers about why he is referring them and tended to stick to his contact book to find the right broker.
This was the same for Louis Down, digital marketing manager at HQ Mortgage & Finance, a firm which deals with buy to let, equity release, later life and some specialist lending in-house.
Despite the somewhat complex cases his firm already handles, Down says: “We do refer our second charge and commercial business to another brokerage.”
HQ Mortgage & Finance has referred second charges for the last three years through a number of brokerages “without settling on one in particular”, before recently deciding to standardise its process by choosing The Loans Engine as its sole partner for second charges.
Drawn in by experience
Some brokers were open about referring cases that they were unable to complete themselves. Others said their years of experience had led to them receiving a consistent amount of business from other brokers.
Phil Morris, director of distribution at Gale and Phillipson, says his firm does all its own work. He added: “We receive referrals in for areas like equity release.”
Tony Silver, director of White House Mortgages, adds that his 30 years in the sector have resulted in advisers coming to him because of his experience and contacts.
“If it’s called a mortgage, I can do it,” he says. “I tell other brokers, if you’ve got anything you can’t do, give it to me.”
Referrals are not an uncommon concept for the sector. He says: “Brokers do tend to help each other; these arrangements don’t have to be that formalised.”
Silver also splits the fees he receives from referrals, often encouraging his peers to use him because they are likely to earn more money.
Despite describing his case load as “difficult”, Silver is aiming to extend his skills to the Shariah mortgages sector.
He adds: “I’ve applied for a variation of permissions so I can do more of them. I see that as an interesting growth area.”
Building a relationship
Down adds: “Our two key reasons for choosing The Loans Engine are good service levels based on our experience with them as well as a comparatively low and fair broker fee charged to the client. This is important because a large portion of our second charge business usually breaks down because of the broker fees involved.”
For Silver, although he has people coming to him due to his expertise, his referral network has been built solely through organic relationships with other advisers over the years.
“I’ll only take referrals from someone I know. I won’t advertise that type of service because you’ve got to know the client, and if I don’t know the client, I’ve got to know the person who knows them really well,” he says.
Keeping clients in-house
Akhil Mair, managing director of Our Mortgage Broker, says as his specialist property finance brokerage already conducts all the business that comes in. He also extends that in-house ethos to his client base.
“I don’t refer to anybody, if it falls over it falls over, then I give the client pointers on what they can do to get it looking straight so we can move ahead and get the right lender.”
Dealing with both regulated and unregulated clients Mair says there’s “no reason why” he can’t place a deal with the expertise and access to lenders his firm has.
“Ultimately the client wants a solution so if I say to them ‘no thank you, goodbye’, it won’t be great, and they won’t be inclined to call me back,” he adds.
“For me it’s ‘sorry can’t help on this occasion, but what I suggest you do is A, B, C’. It’s all about service, advising them on how best to move forward.”