A strong contingent of intermediaries will always fight to remain independent despite increases in capital adequacy requirements, professional indemnity insurance and regulatory burdens.
Speaking at the mortgage round table, Mortgageforce managing director Kevin Duffy, said over the past year or so, negative headlines such as the collapse of Network Data, Prestbury and Premier Network Group, will have made directly authorised advisers think twice about seeking security in a network.
He said: “There have been headlines in which networks, present company excluded, have not fared very favourably. The one and two-man bands, DAs, will be thinking, OK, the PI has gone up, we have concerns about being outside certain circles and whether lenders in a rationing environment be giving their best deals to the networks. But they have looked at those headlines and thought, actually, there is a price I am willing to pay for independence.’”
PMS chairman John Malone said many intermediaries will seek the comfort of a network but “there will be lots of other people out there who want to retain their independence.”
Chartered Insurance Institute’s Society of Mortgage Professionals chief executive Richard Fox said: “Networks have got a problem in that there is a history there of networks that have not served their members and others which went belly-up.” He said he believes the FSA would prefer to regulate a few large organisations but intermediaries will resist this.
He said: “Most of the population of small IFAs and mortgage brokers have worked for large organisations and decided they do not like it. They really want to make their own way in life and that is why they set up their own businesses.”
Platform sales and proposition director Lee Gladwell added: “I think it is important that lenders do not treat networks as an easy option as well. That lenders can recognise the compliance quality that some of the DAs offer as well.”