Openwork proposition director Paul Shearman says branch-based mortgage advice is failing as banks struggle to attract direct clients.
FSA data published in Aug-ust shows the intermediary share of the mortgage market by volume in the second quarter stood at 64 per cent for first-time buyers and 55 per cent for homemover deals.
Speaking at the Mortgage Business Expo in London last week, Shearman told delegates: “The banks are struggling in terms of bank-based distribution – it is failing.”
He estimated some banks are only doing enough mortgage business in-branch to justify one adviser between two or three branches, which he says presents an opportunity for brokers.
But Shearman feels the tide is also turning against smaller brokers. He said: “The amount of regulation coming out of the FSA such as the MMR, which is due to be around 700 pages long, is intense. It is a real challenge for independent brokers.”
He added that bigger lenders are concentrating more on the big broker companies and not on individual DAs.
Speaking about some of the challenges facing networks, TenetLime managing director Gemma Harle said regulatory costs are taking their toll on networks. She said: “The charging structure of networks is under threat and the regulatory landscape is creating a financial challenge. Networks need to make sure their ARs and the network itself meet fitness standards.”
John Charcol senior technical manager John Charcol says: “He is right when he says banks are struggling to get customers to buy mortgages in branches but this has been the case for the past two years.”