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Kevin Duffy on mortgages

Of the many changes to the mortgage industry which FSA regulation provokes, one of the most profound but least documented is the impact it will surely have on recruitment.

In certain ways, what is happening in our market has its closest parallel with the world of football. Older readers may recall the Bosman ruling of the late 1980s. This permitted players at the end of a contract to leave their club on their own terms and seek work elsewhere. It completely liberated football&#39s employment market and precipitated the birth of an era in which players and their agents became the market&#39s power brokers.

Recent FSA figures show a late flourish of applications for direct authorisation. Prior to regulation, broker firms might only transfer between networks – or “clubs” – two or three times in a 20-year career. What regulation has done is trigger in brokers&#39 minds a greater awareness of their true worth. Pick up any trade journal and its pages are surfeited with seminar and roadshow invitations.

In some of this prospecting I smell desperation and insecurity. Not only has N4 energised undecided brokers into thinking about their futures, it has awakened a sense of reflection in brokers long established with a network. Has apathy been keeping some at a “club” for many years?

Staying with the football theme, I see the potential for several Leeds Utd scenarios emerging in 2005. Having looked at some of the deals being offered by networks, it seems to me there are going to be more than a handful of casualties when networks arrive at, say, November, with far fewer income generators than they budgeted for. Their enticements are underpinned by ambitious assumptions on scale which, if unachieved, will see costs to brokers rising. The outcome is that we shall probably see a transfer melee at an even more hyped level than today.

A liquid market with enhanced broker awareness is a recruitment consultant&#39s dream. Savills&#39 coercion of a leading team from Charcol was a defining coup de grace. More deals of this kind are inevitable. Businesses under pressure to retain key people will not be able to swim against the tide of salary inflation. Inflationary pressures draw further adrenaline from other trends.

The broker population is depleting. In the IFA sphere, in particular, countless practitioners in their 50s are looking to cash in their chips. These retirements are not being replenished as graduates find greater allure in the galaxy of high-tech and seemingly less stigmatised career options.

The winners will be brokers and well-capitalised networks. For Arsenal, Chelsea, Man Utd and Liverpool, read Mortgage Intelligence, Network Data, Pink and Bankhall. They must be licking their lips for the post-N4 feeding frenzy when smaller, underachieving players realise that operating off the scraps won&#39t get the bills paid. It&#39s game on.

Kevin Duffy is managing director of Hamptons International Mortgages

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