Mortgage brokers shopping around for a principal to tie themselves to should be wary of making the wrong decision and end up regretting it, senior industry figures have cautioned.
Speaking at a panel session debating mortgage regulation at the Money Marketing Live conference in London last week, brokers were told to ensure that they choose a reputable outfit if they want to avoid direct regulation by joining a network.
Premier Mortgage Services head John Malone predicted that of the 50 organisations that have applied as a network for principal status in advance of regulation at the end of October, only a dozen will eventually be authorised.
Factors such as who is the financial backer of the network, how long it has been in existence and how many member firms it has should all be considered before any decision is made, panellists said.
Brokers were also told by Aifa director general Paul Smee that if they are considering adopting introducer status to ensure there is a proper legal agreement rea-ched with the advising firm to avoid any complications down the road.
Imla chairman John Maltby said it would take 18 months to two years before the relationship between principals and appointed representatives is more clear, with many ARs opting for direct regulation by that stage.
Smee said: “If you are an introducer, make sure there is a proper legal agreement – do not use the back of an envelope. You will get stitched up.”
Mortgageforce managing director Rob Clifford said: “AR status is a good place to start if you doubt your ability to deal with regulation. Not all of the 50 aggregators will survive.”
Malone said: “I would be surprised if there were more any more than a dozen of the 50 who have applied who will make it through the application process.”