Mortgage clubs and packagers do not realise the risks involved in becoming networks, says Sesame product manager for mortgages Andy Young.
The FSA says 70 firms have applied to become networks but Young warns that some of these do not appreciate the costs of becoming a network and the responsibilities they will have after M-Day.
He says Mortgage clubs and packagers face three opt-ions as regulation day app-roaches. They can remain as they are, embark on a business to consumer offering or bec-ome networks as a defence against losing intermediaries to established networks which are tied to an approved panel.
But Young says there are simply not enough appointed representatives to go round and make their business models viable. He predicts that there will only be 20 networks left in 12 months, with further consolidation to follow.
Young says: “Do not underestimate the challenges. ARs go to networks for security. The worse thing for everyone is if a network takes short cuts.”
The Finance Centre partner Wayne Smethurst says: “As a mortgage packager, we looked at our options and decided to stick with what we know. A mortgage packager is a mortgage packager and a network is a network. The two have no correlation.”