When I read the newsflow on Home of Choice over recent weeks there was a certain terrible sense of deja vu.
We had all previously watched Network Data and Mortgage Times collapsing slowly and publicly despite assurances of their rude health.
Yet I was rather surprised to read the news in the first place as, in my mind, any network that had made it this far stood a solid chance of surviving.
I had hoped that had heard the end of the horror stories of appointed representatives fearing they would not get paid.
It has been heartening to read the online comments posted by HoC ARs on Money Marketing and other websites which showed a very different sentiment to those of Network Data and Mortgage Times. Rather than being angry and bitter at the directors, most of the comments were very supportive, so clearly, Gerry O’Brien,
Richard Coulson and the other directors won the trust and respect of their ARs despite the situation.
One of the funniest comments asks if HOC will start the next season with a 10-point penalty and offers to play at right-half, which shows a remarkable sense of humour in a very dark situation.
One of the difficulties in these situations is that during the period when potential buyers are circling a network, non-disclosure agreements mean that ARs are kept in the dark. During this time, ARs are left in a state of uncertainty over whether they will recoup the commission they are owed and whether they should seek to find a new network home or look to go directly authorised.
The whole situation compounds a major issue. It is getting harder and harder for small directly authorised firms to trade, the fees have gone up sharply and while the FSA does try hard to help small DA firms, the regulatory environment is getting tougher, so there will be a natural migration from DA to AR.
This will probably not disappoint the FSA as it is easier for them to regulate via networks rather than trying to regulate tens of thousands of sole traders.
The Home of Choice scenario will undoubtedly mean that prospective ARs will be a lot more cautious about which network they choose. This will probably help the bigger networks and in particular those which have a strong IFA offering as they are not so reliant on the mortgage industry.
The FSA’s plans to put the responsibility for affordability on the lender will make it harder for lenders to police small firms’ compliance compared with networks.
Networks seem to be winning what feels like the lion’s share of exclusives at the moment and lenders which want to restrict their distribution are outsourcing tranche management to the bigger networks rather than via mortgage clubs.
I hope the pendulum does not swing too far as there should be a place in the industry for both ARs and DAs but I think there will be further consolidation and aggregation on both sides.
Jonathan Cornell is head of communications for First Action Finance