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Profits plummet after M-day

Nearly half of brokers have seen profits fall since M-Day, says Alliance & Leicester in a survey which also finds that many appointed reps are considering switching to direct regulation.

The A&L mortgage broker survey, conducted in early January, interviewed 59 randomly selected brokers 100 days after mortgage regulation began.

Forty-four per cent say that profits have fallen and 47 per cent need to increase turnover to achieve their previous level of profitability.

Key fact illustrations have lengthened the admin process, with 45 per cent of brokers saying it now takes over two hours more than previously and 47 per cent believe KFIs provide no real value for the consumer.

A&L head of intermediary mortgages Mehrdad Yousefi says: “Regulation has been a mini-revolution in the mortgage industry. It is apparent from our research that some brokers are still adapting to life in a regulated environment. It is too early to make a conclusive judgement. It will be interesting to revisit this issue towards the end of the year.”

Ninety per cent of directly regulated brokers felt they had selected the right route to business while only 54 per cent of brokers who opted for appointed representative status felt it was right for them. Fifteen per cent of brokers who have become appointed reps are considering switching to direct status. Twenty-three per cent of ARs say it was initially easier to become registered as appointed rep.

London & Country mortgage adviser David Hollingworth says: “For smaller brokers, the new administrative elements will slow down the number of cases they can handle. But regulation has been brought in to gain the confidence of consumers,and regardless of the size of your operation, that has to be the focus.”

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