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‘To raise standards we need to address broker remuneration’ – analysis

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  • 21/01/2020
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Brokers believe that the standard of advice on offer must improve, but questioned how effective further qualifications are in attracting business.

 

Earlier this month the Society of Mortgage Professionals called for greater numbers of brokers to go for chartered status, with chairman David Thomas noting it was something many advisers aspire to “because they want to be the same as their peers in the wealth sector”.

However, intermediaries are unconvinced by what difference such a qualification would make.

 

Do clients care?

Andy Wilson, founder of Andy Wilson Financial Services, said the issue with qualifications, like attaining chartered status, is that the general public neither recognise nor understand them.

He added: “They naturally expect their mortgage adviser to be qualified to advise on mortgages – but they don’t generally care to what extent they have pieces of paper showing ‘better’ or higher level qualifications. Experience in the market probably counts for more.”

Martin Stewart, director of The Money Group, said it was vital brokers were able to combine qualifications with common sense.

He said: “A chartered mortgage broker might be able to explain how banks raise funds as well as various aspects of an economic cycle, but that won’t really resonate too much with a limited company director who is struggling to borrow what he needs.”

 

Focus on later life

James McGregor, a broker at Mesa Financial Consultants, said there needs to be a greater focus on education when dealing with later life lending, as “there are so many factors to take into account when doing equity release and it is key advisers are aware of these factors.

“There could be huge detrimental effects to the client if not.”

Wilson noted that he has opted to go for additional equity release-related qualifications, like the long term care exam even though he does not advise in this area.

He said this reinforces his knowledge and also helps when introducing his service to other brokers and advisers looking for referral partners. 

Wilson said this helps him “demonstrate to other professional advisers that I also have a wider appreciation of financial matters affecting my older clients, and they can be reassured I will be able to properly look after any of their clients they introduce to me for equity release”.

 

How do we improve standards?

McGregor said a lot of the education on offer for brokers comes through lender roundtable events, though he questioned how effective these really are.

“I believe ultimately the responsibility falls on the brokers to upskill themselves though,” he concluded.

Stewart argued that the industry should aim to improve standards, without diluting the experience and knowledge that most brokers have, and added that any attempt to do so would have to touch on broker pay

“If we really want to raise  standards then we need to address the elephant in the room – you can’t be seen to be a professional adviser while acting like a commission-only salesperson,” he said.

“I would suggest if we are to raise standards across the industry then we need to also address how brokers are remunerated.”

 

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