Stephen Adams highlights the risks unregulated introducers pose for appointed representatives and directly authorised firms
A large proportion of fraudulent activity stems from business that was originated via unregulated introducers. This is not to say that everybody looking to introduce mortgage business to your firm is a fraudster. However, it is clearly the case that close attention should be paid by all appointed representative and directly authorised firms to individuals approaching them to introduce business.
At present there are a number of ex-advisers who have either been terminated by the FCA or removed from lender panels but still want to make money in the mortgage market. They are regularly approaching unsuspecting advisers and seeking to exploit any weaknesses in their due diligence checks. To protect your business you need to be sure that the individuals that you deal with are genuine, honest and ultimately do not put your career at risk.
If after completing your checks you are happy to proceed with an introducer agreement then it is strongly recommended that the relationship is put on a professional footing. A simple agreement, signed by both parties, to outline your relative responsibilities and limitations is a good way of setting up the business relationship. Any agreement you make should set out the terms of the arrangement, such as what product types will be referred, how the client is informed that an introduction has been made, how information is passed to you, how the agreed remuneration will work and how the agreement can be terminated. If the introducer is not keen to have an agreement of this type in place then you should certainly ask yourself why this would be.
By carrying out robust checks as part of your standard procedures for taking on introducers we believe that you will reduce the chances of dealing with fraudulent clients. Of course you could undertake all of the above and still be targeted by an individual who wants to commit fraud. Be sure to adopt a common sense check when dealing with introducers and customers. If you don’t feel comfortable with what you are being told then ask more questions, if you are still not comfortable after this then do not proceed. It just isn’t worth the risk to your business.
If you would like to join our award-winning Mortgage Network as an appointed representative or become a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.
At Mortgage Intelligence, we invest in the right people and the right technology for both appointed representatives and directly authorised advisers. Sally Laker highlights the importance of maintaining a balance between embracing new technologies and continuing to support a people-based industry.
I recently changed my TV package online as the lure of the next two series of Homeland got the better of me.
The change was the usual story really – my password didn’t match, my e-mail address didn’t match and so I decided it would be easier to pick up the phone and speak to someone about changing the package. And, it was. It made me think about our industry and the need to deal with people face-to-face and over the telephone. The people factor builds trust and relationships as well as providing a valuable service.
The other essential tool is good technology. To provide a valuable record of the advice given to the customer and all the associated documents loaded onto the system. A good Point of Sale (POS) system is so important but like everything it is only ‘good’ if it is kept up to date.
We recently updated our version of the Key POS system to change the way in which we record data and use it. Even though the system is an up to date system, it was a substantial piece of work bringing in contract developers to deliver the changes we required. There are numerous stages, including the specification, which takes time and requires experienced people who understand the system to map out what is required. This then needs to be formatted – a different skill required, so that the specification can be interpreted into ‘developer speak’ to enable the work to commence.
Frequently, there are choices and processes that need guidance all the way through and it is important to consider the impact of any slight change, or you could be back to square one. Once the work is ready, testing begins. You need people who understand the system and will test it and try to break it. Flaws get picked up and then fixes and changes need to be done. That goes back and forth for some time until the upgraded system is ready to be released achieving the desired result. The cycle needs to continue and we regularly look at what the next enhancements will be.
The recent changes we have released were significant and we now have an enhanced system that incorporates the dynamics of today’s regulatory world.
After going through this process, it becomes less onerous as knowledge of the system improves. It was still a challenge, expensive and time consuming but we allocated a six-month timeline which was a tight timescale to keep the focus on the job and complete it.
We have always promised to invest in technology that provides a system that is up to date with mortgage and insurance industry needs and we will continue to do so. We do know that both appointed representatives and directly authorised advisers are not robots and that’s important to us, because although this is a people-based mortgage and insurance industry, we need to be backed up by good technology and not replaced by it.
If you are interested in switching over to join our award-winning Mortgage Network as an appointed representative, or becoming a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.
Even though the General Election took place over a month ago, many people are still talking about how it was such compulsive viewing, with many staying up until the early hours awaiting the result.
The fascination was watching all of the opinion polls and predictions fall by the wayside as the losing political parties accepted their fate graciously. How did these parties get their strategy so wrong, why did it not deliver the clear objective to win the election with an outright majority?
Commentators gasped as the charts changed to a sea of blue and the Labour party were in shock as they saw virtually all their Scottish seats lost to the Scottish National Party in one night. Surely if the Labour party had been close to their customers and understood what they needed to do to get their vote they would have changed their tactics to secure those votes.
What was their strategy and did they have the right culture within the party to question the tactics to deliver that strategy? How would it achieve the end goal?
If people are afraid to speak their mind and go with the majority to keep the peace that is a culture that doesn’t work in either politics or business. If the public didn’t see Ed Miliband as a strong credible leader, why did the Labour party not see that either? If they were in touch with their customers surely someone would have stumbled across it.
It is the same in business – we set a goal, we put together a strategy to achieve it and then look at the tactics required to deliver that strategy. As always it is the team that you build around you that adds the magic required, they need to feel valued and listened to, their views are important to ensure you get the tactics right.
Once the team understands what is required of them and why their role is so important to deliver the overall strategy you have a good chance of achieving your goal. Setting the right culture is in my view essential, and putting the customer at the heart of the business is a culture that works well and leads to success. We have seen what happens when you don’t!
What I love about this industry is the constant changes and challenges we face, often we look back and find our businesses are stronger as a result.
Take the quality metric for example, lenders decide that they were no longer talking about sales volumes but had a whole new agenda about quality. Huge metrics were drawn up for networks with various combinations with which our appointed representative firms would be measured. Some were so complicated it was difficult to interpret them.
Over time they were tweaked and more information was shared with the networks, as a level of trust was built up for the first time with lenders and their fraud and risk departments.
As a result we all know and understand so much more. We are able to recognise information that needs to be challenged from day one. Many cases that may have potentially been a fraud case don’t get through the door and once you know what to look for, it is so much easier to protect your business and deal with the right clients.
However, one of those metrics has always puzzled me – how can networks and brokers improve on the number of cases that go into arrears?
Divorce, death, illness, redundancy and financial hard times are all reasons for falling behind with payments but they are not events that the broker can predict when arranging a mortgage. It is, however, a relevant discussion to have with the customer and therefore providing protection for them plays an important part in the advice process.
However, it may be time for the lender to accept that if they are unable to give the broker any information on cases that are in arrears, including client name, brokers can do no more to cover this aspect.
The lender holds the data and the lender makes the ultimate decision to lend. They currently have little interest as to whether there is a policy in place to protect the client’s income which could prevent arrears in some cases. Maybe it is time for lenders to not only review the metrics but look at addressing the issue of protecting for the future when arrears may not be as low as they are now.