Chief executive Gerry O’Brien says lenders are wrong to favour clubs over networks when formulating distribution strategies.
He says: “Lenders should know that business through a mortgage club has no quality mark.”
O’Brien says clubs were created to generate volumes. He says: “It is business flow with no degree of responsibility. I am liable for all business that goes through my network but clubs do not have in-depth knowledge of the advisers who are putting the business through them and do not have to report to the FSA.
“In a marketplace where quality is key, clubs do not have the systems in place to uphold these standards. In this climate, there is no place for reward without accepting liability.”
PMS, the UK’s biggest mortgage club, agrees with O’Brien’s claim that quality is a priority in the downturn but says his accusations against mortgage clubs are “naive”.
PMS development director Martin Reynolds says: “Quality has been the cornerstone of the PMS relationship with lenders for years while other distributors have only been after volume and growth. Lenders are also looking for stability and longevity from their relationships.”
Reynolds says PMS has been monitoring quality of business and compliance regimes since its inception and does not believe that advisers who are members of networks provide higher-quality business or compliance.
He says: “Both appointed representatives and directly authorised advisers have the same regulator so casting all DAs and mortgage clubs in the same boat is very naive. Ultimately, lenders will judge all distributors by the results they see.”