As the volume of cases has increased so too has the amount of work which must be carried out per case to comply with the Mortgage Market Review (MMR) requirements.
A rise in demand which dictates more work will, in turn, impact on other areas of their business namely quality, compliance, profitability and the capacity to write protection sales. This week we’ve asked our panel of broker experts if they agree that 88 is the magic number and to consider the implications of this level of work on the individual adviser and the health of the business.
Dean Mason, practice principal at Masons Financial Planning, discusses the pressures involved in completing this level of work with the additional requirements of the MMR.
Luke Somerset, head of product development at specialist broker firm Contractor Financials, considers the benefits of streamlined processes to cope with greater volumes.
Adam Smith, head of mortgages at specialist brokerage Police Mutual, discusses the difficulties of maintaining high levels of quality when demand ramps up.
Dean Mason is Practice Principal at Masons Financial Planning
We are writing slightly north of that figure per adviser. Pre-MMR [Mortgage Market Review] we had a good idea which type of cases were going to cause us the most work. However, since its introduction with an average of 25 to 30 live applications on our books at any given time, this is far less predictable with regard to requirements and documents. This is more prevalent on residential mortgages for obvious reasons but mainstream lenders in the buy-to-let market can be just as finicky or at times incompetent in that arena too.
I would say our business levels are higher than post-crash but we were a new business then. I would estimate that it is taking two to three times the work (sometimes more) to get a case written post-MMR including additional compliance. This makes for a very high pressured working environment where agents are attuned to the emotions of our clients, add to this lenders’ slow response times and inconsistencies and the decent living you can earn at this comes at a pretty low hourly rate.
Because of this, protection sales are often put on the back burner and it’s vital to have a strategy for following up clients on protection (usually post-offer) as we do. In comparison to the process required and poor service currently being offered by most mortgage lenders, dealing with protection providers is a breeze and time is spent, as it should be, giving the client the right advice rather than the paper chase which usually follows on mortgages now.
Luke Somerset is head of product development at specialist broker firm Contractor Financials
Since the upturn in the mortgage market brokers have found their services under increasing demand and 88 applications per year may well be the new norm.
Whilst some brokers are finding their model creaking at the seams, most have embraced the challenge created by an increase in demand for their service, working smarter to ensure that client outcomes don’t suffer adversely as a result.
As compliance requirements have increased significantly brokers and lenders have turned to processes designed to streamline their service.
As professional advisers we know the benefit of a well prepared and thought-out application all too well. Get it right first time and you’ll have your clients’ offer in weeks. If you fumble your way through the process haphazardly not only will your client have to wait for longer to secure their offer but you will have to intervene in the application far more than is necessary at the cost of your time.
This will help brokers to cope with client demand but there remains a glaring concern over the suitability of advice – or more to the point the lack of evidenced suitability – with some 38% of sales having an ‘unclear’ rationale according to the FCA’s recent thematic review.
It’s unclear what the new norm in terms of volume will be, but as professional advisers we need to ensure that we strike the right balance between quality and quantity if we’re to survive in the post MMR world.
Adam Smith is head of mortgages at specialist brokerage Police Mutual
The growth in new mortgage lending has accelerated that’s for sure, bringing additional pressure on advisers but quality must shine through regardless of volume.
Our advisers are each completing more mortgages than the recent figure from Halifax of 88 cases a year and over 100 a year is fast becoming a norm. Cutting corners is not an option so the right support is critical to having a sustainable future.
This ultimately means in order to drive sustainable growth, the costs of running a high quality advice practice need to rise in line with increasing volume. It remains important that lenders recognise this and remunerate advisers appropriately.
It goes without saying that a well presented case, with the right supporting documentation, usually equates to a faster offer, a smoother experience for the customer and a good outcome for the lender. Increased volumes cannot be an excuse for lower standards and processing support has been a key area of investment in our business to maintain case quality.
Protection is also integral to the mortgage advice process, so as mortgage volumes rise, so do the number of protection cases. With a well-resourced team and the correct support and development of advisers, it is possible to write higher volumes without sacrificing protection penetration or case quality.
At Police Mutual, our core purpose and values place the interests of our members and customers first. Increasing volume means it is essential that our advisers are correctly supported to deliver good outcomes for our members and customers but also good outcomes for our lenders and our organisation.
