Keeping records and following lengthy procedures to ensure they can prove they have provided their clients with the most suitable advice has been the norm since the credit crisis.
But brokers, like all other professionals, have a limit to the amount of cases and clients they can deal with so this week we’ve asked our panel of experts if there is a risk that brokers could unintentionally skip compliance procedures or be tempted to cut corners under the weight of pressure?
Martin Reynolds, chief executive of SimplyBiz Mortgages, looks at how advisers have evolved in terms of their business conduct and examines what may suffer if volumes outpace adviser numbers.
Neil Hoare, commercial director at Home Loan Partnership, says firms should be helping advisers to be more productive through technology and administrative support so they can cope with the increased workload.
Adam Smith, head of mortgages at specialist broker firm Police Mutual, believes a package of support and strong company values are of equal importance in helping brokers cope with business volumes compliantly.
Martin Reynolds is chief executive of SimplyBiz Mortgages
I do not believe that an increase in the volume of business will lead to a change in the practices of an intermediary.
We have seen a steady increase in both mortgage volumes and also the intermediary share of this volume yet lenders are reporting an improvement in quality. All distributors, whether they are networks or compliance support services have worked very hard with their members to help them understand the changes in the regulatory landscape over the last few years. With this comes the understanding of their individual responsibilities and how to protect their own businesses.
I fully believe that the advisers currently active in the market are very diligent and provide a full advice process to all their clients, fully document this and provide the relevant documentation that lenders require. I also believe they understand the consequences of not doing this.
Will anything suffer though if the mortgage market continues to grow at its current rate? If the number of advisers stays constant then as we have seen previously protection and GI sales may start to drop which is far from ideal.
The challenge will be to both recruit and train more mortgage advisers or to look at how they advise on protection and GI. This may see the shape of an intermediary firm change as they recruit bespoke protection and/or GI advisers. This will ensure that all clients still receive the full service whilst the advisers have enough time to provide this service to all who want it.
Neil Hoare is commercial director at HomeLoan Partnership
There has always been disparity between the information an adviser captures at point of sale and the technology that a lender uses to determine the quality of an application.
Advances such as MOGObankconnect will make this disparity wider unless the technology is embraced by intermediaries. The art of encouraging the client to be open and honest about their circumstances is an inherent skill which has consequences if never practised.
Without technology, prescriptive evidence gathering, irrespective of the lender’s requirements, is key. A full house of three months’ bank statements, three months’ payslips, a recent credit report, proof of ID, proof of deposit, tax returns, google earth pictures and employer references all contribute to mitigating risk in the advice process, risk that could cause a firm to lose an agency through poor quality, which in turn starts the cascade effect.
Of course one question is how do you find advisers that have both the character to advise and the attention to detail for administration to meet the demands from customers? Should we be asking what the adviser to administrator resource ratio could look like? In the past, firms have targeted growth through new advisers but with the advances in technology over the past 12 months, the strategy now ought to be to grow by increased adviser productivity and recruiting administrators to support them. If we clearly get the advice and processing balance right, apply technology to manage the client interaction, and prescribe evidence gathering, then volume increases but not at the expense of quality or risk.
Adam Smith is head of mortgages at financial services firm Police Mutual
It is hard to disagree that working under pressure invariably produces sub-optimal results at best and customer detriment at worst. Working under pressure, however, for most advisers is probably the norm attributed to a cocktail of a faster paced society, regulatory change and challenging market conditions.
Business quality, on the other hand, is not optional. Risking it means risking your reputation and being busy cannot be an excuse for lower standards. In order to maintain high quality advice, high standards must be integral to a firm’s core values.
At Police Mutual we serve the police, military and their families. We believe that by anchoring our practices to our core purpose and values, which are centered on putting the interests of our members and customers first, we can ensure we secure good outcomes for them, our lenders and our organisation in a sustainable way.
Our members and customers serve to protect us, applying the highest professional standards every day and we believe it is our obligation to reciprocate as we serve them. Our core values underpin this with an integrated approach to compliance in daily practices where our advisers are provided with the right support and tools. We recently invested in a new POS system which streamlines the sales process while providing greater clarity for managing case quality. Uncertainty and risks are inherent in our industry but investment in systems and people including their development and training means our standards can be maintained with increasing business volumes.
