tter for quality business


Is big best? Should the big networks get all the deals? We are told this is to control lending levels and quality but by giving all exclusives to the big networks one is covering a fairly large proportion of the tied broker market.


This not only raises the question of how well lending would be controlled within such a vast market place but also the question of quality. Are we saying that members of these networks are more responsible, compliant and accountable, compared to the directly authorised adviser accountable direct to the FSA or the smaller network with tighter reigns on its members?


As a small broker in a large network how closely are you actually monitored? With the removal of many of the high risk lending triggers such as self-cert, this can mean that fewer cases written by the broker are actually assessed, this in itself creating an inherent risk for everyone. How well do the larger networks really know their brokers?


Yes, the bigger performers will be known to them but there are many smaller firms and one man bands that may not have that personal relationship and rarely see a compliance or T&C supervisor. With that in mind, how quickly will the network hang a broker out to dry, often unfairly, if the broker has an issue for example with fraud or a lender? At Ingard for instance we have regular communication with all our brokers and receive copies of every case within seven days of application and review every one. This, combined with detailed management information and regular one-to-ones, provides a robust infrastructure protecting network, broker and lender against key concerns such as quality of advice and fraudulent activity.


The smaller networks will generally be much more hands on, with key decision makers at the coal face and able to make judgements and business decisions based on fact and actual situations as opposed to MI easily configured to give a specified result.


David Ewing, managing director, Ingard


A small, quality network is much more in tune with its members and as a result should provide a lower risk to the lender.


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There are a number of reasons that lenders will consider the advantages of working both with networks and directly authorised firms so each one with have merits when determining this strategy. The first and probably most important of these is the quality of the compliance proposition. As lenders now are looking for quality rather than quantity the emphasis is going to be on those firms and networks that have tight compliance. A directly authorised firm can monitor their advisers if they are based centrally and possibly can adapt to changes in regulation quite fast. A network on the other hand can have set standards that are regularly monitored to ensure that all advisers are working to the same standards. For the latter it will be easy for the lenders to review these standards and determine for themselves if this works well with their business model.


Despite the fact that quality is more important than volume


there is still a desire to lend and doing so in a controlled environment. Having worked out which networks have the strongest compliance the lenders can then use this to obtain a level of the market that they feel comfortable with whilst maintaining the ability to pull back when a tranche is running low. We have all seen in recent times that lenders have offered rates that appear more attractive through a branch but from time to time, even now, we see favourable deals via certain networks. This is a healthy sign that the branches cannot possibly reach out to the clients that brokers are fortunate to have. If a lender was to launch a good rate to the whole market this could mean the funds run out too quickly which not only costs money in terms of having to update everyone soon after launch but it can cause reputational damage both to the lender and the brokers looking to use it. For the two main reasons above, it is easy to see why lenders consider limiting their distribution but this will


David Sheppard, managing director, Perception Finance


constantly evolve to suit the market and the level of lending they want. We have not seen the last change either.


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