Where have all the Mortgage Advisers gone?
In a saddening report thousands of hardworking mortgage advisers are leaving the industry on mass. Trumpo asks why?
I spent yesterday afternoon with a succesful entrepreneur who sold his business for many millions of pounds in 2000. The individual, who is extremely motivated and still in his 40’s finds it hard to understand why I can’t get out their and shout how great a career being a Mortgage and Insurance adviser is from the rooftops.
So it got me thinking, very early this morning - why cant I motivate thousands of great people into a new and exciting career?
The things people look for;
- Respect - Are we endorsed as a respectful professional by our regulator?
- Income - Does the career provide a good level of sustainable income?
- Job Satisfaction - Do we enjoy getting up in the morning and bounce into the office ?
- Benefits - Great pensions and healthcare?
- Career development - Opportunities to take steps up the career ladder or diversify if desired ?
- Fun - Can you have a giggle every day?
When I joined the industry back in 1990, all of the above were key drivers to the many hard working and entrepreneurial spirited ladies and gents flocking to the industry.
What stopped the good things?
Well it all started going pear shaped in 2004, the run up to new FSA regulation of the Mortgage and Insurance industry.
Has FSA regulation benefitted the consumer? Trumpo says NO.
Has regulation benefitted the advisers? Mass departures year on year, Trumpo says NO.
Well how dow we stop what appears to be a huge leaky bucket, without any new water being poured in.
If you try to speak to our regulator, they say they are in listening mode, if you say the industry is bleeding a slow and painful death, they give themselves bonuses for their achievements - all the while taking in more fees from a declining adviser base who have reducing incomes - then to top it all off they advertise jobs with the FSA that are now far higher paid than those within the industry.
And then I go back to my meeting yesterday and sit enlightened, through my own overview of our industry, with the answers to why all the Mortgage Advisers have gone?
They have all gone for a job with the FSA and are having a good laugh at all of us still here!
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May 21st, 2008 at 8:21 am
The amount of Mortgage transactions is down by at least 40%, the number of Lenders offering mortgages is down from over 100 to less than 30, the number of Advisers who have left the industry can only be guessed at but is a significant percentage.
In view of the above, why haven’t there been significant job losses at the FSA? Basic maths tells you there must be less for them to do!
May 21st, 2008 at 8:25 am
I’m encountering the very low business volumes currently being done as a result of the crunch and direct only deals, coupled with a suffocating blanket of regulation that has gone a little too far now with a regularly updated action plans required for many activities now that leave one man bands scratching at an already thinning head.
On the other hand Trumpo, I felt by about 2004 there were far too many mortgage advisers attracted by the then easy pickings. One minute they were ice cream men, the next day they were somehow advisers on peoples biggest financial comittment.
Good riddance I say. Lets have a 60% reduction in advisers.
May 21st, 2008 at 8:29 am
We are a firm of General Insurance Brokers and are concerned that our industry is going to go the same way as the Mortgage Advisors. Constantly increasing regulation including the push for mandatory commission disclosure is going to drive the small independent out of business and leave the consumer with less choice and ultimately more expensive products.
May 21st, 2008 at 8:47 am
Perhaps we should adopt the same campaign they use against the oil giants. If we avoid using one lender (ensuring not detrimental to the client) and manage to spread the word to all brokers, that lender’s introduced business will dry up and they will be forced to put out some stonking rates (maybe even as good as HSBC’s!!!). Then the others will have to follow. Let’s start with C&G as I believe they were guilty of one of the biggest dual pricing gaps, and their service needs a good clear out anyway. How do wew spread the word? I’ve asked the big mortgage clubs (PMS and Paymentshield) and they are not interested.
May 21st, 2008 at 8:59 am
Oh Trumpo, how things have changed. Mind you, I didn’t hear too many mortgage advisors complaining about self-certification mortgages, an open invitation to fraud. A lot jumped on that bandwagon and aided the frauds. Of course, you can blame the FSA for allowing that, fair comment.
May 21st, 2008 at 9:11 am
I am surprised that you think it would be any different. I am an IFA and have been in the industry for over 30 years. I have seen the demise of direct sales and a huge reduction in IFA’s. To add to that a massive increases in fees, regulation and paperwork.
The strange thing is the clients haven’t changed they still want the same things as they have always done and an advisor they can trust. I am not saying regulation wasn’t needed but we have now reached a point that there are not enough advisors to cater for the UK population and the average age of IFA’s is in excess of 50 so within 15 to 20 years there will be no one to give advice about anything.
The only people left will be the banks who have brought about the current problems. I haven’t noticed many of the banks being brought to task over there lending policy.
I am concered for the futre of all advisors and it will be to late when the industry has been reduced to such low numbers there is no one left to bulid it back up.
May 21st, 2008 at 9:23 am
I am 40 on friday. I fell into the industry at the age of 21 and I believed that I would buck the trend and make it to my retirement having only had 1 career. I am more determined than ever to carry out that belief despite all the forces against me and my fellow industry peers. Despite only a small number of rogue individuals we are not respected for the job we do by the regulator or the general public. The reason I believe, is simply brand. We do not have one. We need to develop one single brand in the eyes of the public and one single voice in against those that do not understand or respect us. I will continue to fight on even after my 40th because I still love the industry. I enjoy advising and despite what the FSA think I cannot charge a fee for telling a client that they can get a better deal elswhere. That would be ripping them off!!!
May 21st, 2008 at 9:34 am
I’m not a mortgage broker, but a vehicles leasing brokerage … so sorry for gate crashing the party chaps!
We cam under the gaze of the FSA a couple of years ago because of the handful of GAP Insurance policies we sell each month for £160 - deal deal eh?
The FSA paid us a visit and couldn’t figure out our business at all. They found out we were over reporting! During the course of that visit, and understanding that just like the VAT and Inland Rvenue, if you are strong enough in your arguments and solid enough with thr facts then they back down. Why? Because they don’t really know enough.
I stopped being scared of these guys a long time ago. I also stopped respecting them when a couple of days before we had to send in our first submission I approached them to inform them that we MIGHT be a day or two late because of the absence of one of our Directors who was the only one who could provide the information required to submit the report - a bit of information we only realised we required late in the day, and only then because of the unhelpfulness of the FSA in assisting us on a question we had for them. In the event we submitted the report the morning after midnight on the due date. We were fined £200. What did we actually have to report to them? Absolutely NOTHING. A big fat Zero. We had actually transacted no Insurance business in the period the report covered.
It made me laugh after the Northern Rock debacle. The FSA were guilty of incompetence, so what was their response? Hire more people to cover for the incompetents already employed there. It really is another planet that they live on isn’t it?
I have now de-registered the Company as a Fully Authorised Firm and have gone Authorised Introducer to cut out the contact I have with the FSA and the time wasting reports that we completed. I’m also reducing my Fees accordingly.
May 21st, 2008 at 9:49 am
Spare a shilling for car finance brokers….we’re all suffering to the point of collapse at the moment.
May 21st, 2008 at 9:55 am
The FSA are making sure that the general public are burdened more and more with extra documentation. We are told that if is not written has not been said. So now from the time we say “Hello” clients will be provided with the following:
IDD mortgage, IDD insurance, terms of business, fee agreement, data protection, copy of fact find 28 pages long, copy of interest only fact find 8 pages long, ASU additional questionnaire, quote 8 pages long, suitability report 5 pages long, not to mention lenders documentation AND NOW TCF document 2 pages long what next………no doubt the FSA will move on to something else next year?
Yes you guessed it, clients will end up with more pieces of paper. No wonder that thousands of mortgage advisers have left the industry and the general public is totally confused.
May 21st, 2008 at 9:58 am
When the FSA took control of teh Mortgage and general insuarnce sector (that is with regulation) I forcast what would happen- more claims against advisers, some genuine most - that question HAVE YOU BEEN MISS SOLD YOUR CONTRACT, BE IT MORTGAGE /PROTECTION/ HOUSE OR CAR POLICY.
Very soon after 35 years in financial services, I WILL BE MADE NOT A FIT AND PROPER PERSON TO TRADE,WHY BECAUSE I WILL NOT COMPLETE A PENSION REVIEW.(I HAD ALREADY COMPLETED ONE IN 1999 FOR THE CLIENT) I have decided that I can no longer write a cheque each year to pay the wages of the FSA,OMBUDSMAN,ENFORCEENT DIVISION & F.C.S.L,personel- I can see no benefit that has been brought to our industry by theregulation imposed - CREDIT CRUNCH - BE ASSURED MR GORDON BROWN WALLOWED IN HIS REVENUE RECEIVED FROM HIGH HOUSE PRICES.,STAMP DUTY/VAT/INHERITANCE TAX - MOST OF WHICH HAS GONE TO FUND THE WAR IN AFGHNISTAN & IRAQ. OH YES/
I HAVE EARNED MORE INCOME BY HOUSE PRICES GOING UP BUT MY NET PROFIT HAS GONE DOWN AND WITHIN THE NEXT TWO MONTHS OR SO WHEN I AM LABELLED NOT A FIT AND PROPER PERSON - I WILL HAVE NO INCOME.
OVER THE PAST FEW MONTHS THE FSA & SUPPORTERS HAVE PROMISED TO FOLLOW ME TO THE GRAVE SHOULD ANY FURTHER COMPLAINTS COME IN - I AM GOING TO BE CREMATED IN DURHAM CREMATORIUM I CORDIALLY INVITE THEM ALL TO MY FUNERAL.( THEY MAY FOLLOW ME BUT I AM SURE THEY WILL NOT FOLLOW ME TO HEAVEN)
May 21st, 2008 at 10:40 am
Likewise where have akll the General Insurance advisers Gone. Again since 2004 when the FSA came poking around most decided they had had enough. Its not the fees that put many off, its the that they have a rule book, but no rules to follow. Whats the point of spending 2 days every 6 months completing RMAR returns. Almost all insurers provide rikk transfer, so how are the consumers being put a risk. The amount of paper work we now have to send out for a single motor policy is unbelivable, and nobody reads the crap we send anyway.
This is just another government scheme to give so called unemployed a job with the FSA. If they did thier jobs we would’nt have runs on banks, and credit crunchs.
Insurers are just to blame for the state of the industry, for being to greedy and trying to control the way business is produced.
May 21st, 2008 at 11:33 am
In Northern Ireland house transaction are down 60% from Q1 2007, clearly a massive reduction in business for everyone concerned in this transaction, yet solicitors and surveyors appear not to be getting hammered in the same proportion as mortgage brokers. “Generate other income streams”, has always been the throw away line used when taking to employees of lending institutions ie. BDM’s which is obviously being fed down the line from within these institutions. Mortgage brokers are so influenced, directly and indirectly, by the lenders that they now feel that they can strengthen their own position further at the cost of the intermediary market. There is no other way to look at what is happening, with direct deals, reduction in proc fees and the power they hold with the Gov and FSA. The amount of money they have at their disposal cannot be ignored when it comes to swaying opinion at top level. An earlier submission on this blog talked about trying to stand against indivdual lenders but the mortgage clubs, networks etc are so in bed with lenders that it would be nigh on impossible to get them to bite the hand that feeds them. If there are less intermediaries will that not lessen the demand for exclusives and clubs. Look at where packagers are at present. Our trade bodies, AMI, PFS etc must come together with one voice and demand that the lenders loosen their grip on the intermediary market, less they choke the life out entirely.
It is a disgraceful performance that the lenders are carrying out at present given that they have been an integral part of the construction of the current market.
May 21st, 2008 at 12:59 pm
Working as an AR we are constantly being hassled by the compliance department for not crossing the t’s and dotting the i’s, yet large Directly authorised firms continually flout the laws set by the FSA.
I worked for one brokerage where they did not ask the client to even sign the fact find.
It looks like as this credit crunch rolls on the amount of advisors is going to shrink, if we can make it through the next 3 years still in business there eill be could opportunity’s to make money, If the FSA let us.
May 21st, 2008 at 2:22 pm
I believe the Mortgage lenders, prime and sub-prime, have seriously over reacted to the USA sub-prime mortgage demise.
Sub-prime mortgage lenders played a significant role, in this country, helping many people to recover their financial positions and to improve their credit history through sound remortgage principles.
Many people, in their lifetime, get into fininancial difficulty, (sometimes through no faulkt of their own), and the sub-prime mortgage sector really helped many people to start managing their finances in a better and more affordable manner.
Obviously self cert in this sector has been much abused, but responsible mortgage brokers have ensured affordability and have fully explained consequences of rates reverting following the fixed or discounted intial periods.
The large Banking Institutions have now left a large sensible chunk of sub-prime clients is a real mess because so many have ceased to offer sub-prime mortgages…is this not extremely irresponsible of them? and where does that put the broker who invariably told his/her clients that they would be able to remortgage at lower rates after the initial period if they did not impair their credit histories further during that period?
Most large international banks are making £billions and I believe they have over written down the supposed losses to offset their huge corporate profits, probably giving loss offset for more than one financial year.
Sub-prime lending is a very important part of lending and if conducted responsibly can imprive the lives of many thousands of people in the UK…so what really is the problem and why have the number of sub-prime lenders been radically reduced in the past couple of months?
Lening is always a risk and rates have, in the past, refelected that risk alongwith LTVs. Who is now running the banks…no risk takers that’s for sure !
May 22nd, 2008 at 8:43 am
I wonder what type of redundancy package the FSA is going to give the excess of staff it will shortly have???
May 22nd, 2008 at 10:52 am
I’ve never had the best possible advice from a mortgage adviser or an IFA.
Maybe they are not that passionate about their job, or maybe they are too restricted in their thinking, but every time I have sought professional advice from either a mortgage adviser or IFA, I have been able to find a more suitable product for my circumstances that is also better for me financially.
Mortgage advisers, in my experience, are not as good as doing the research yourself. British people suffer heavily from a lack of financial understanding. People should be encouraged to learn about finance. It’s not rocket science yet it is a highly valuable life skill.
While mortgage advisers and IFAs are an important and valuable part way to help people choose suitable financial products, their demise is not a major concern if it is being caused by a rise in DIY financial planning.
May 22nd, 2008 at 1:45 pm
Are we missing something here with regard to small mortgage brokers leaving?
The FSA isn’t interested. They think that mortgages a simple and that the consumer can just search their comparison tables to ‘find the best deal’. Within 18 months or so I would warrant that the FSA will have a short ‘tick the box’ questionaire which will take clients through a ‘decision tree’. This will then be able to link to the comparison tables to give a list of 2/3/4/… lenders who will accept the customers mortgage.
(The FSA will expect this to suffice for 60/70% maybe more, of applicants because the regulator believes that anyone with a less than 100% clean credit history has NO business whatsoever in borrowing a penny let alone buying somewhere to live. If only the world were so perfect!)
The big lenders will then suggest, only for the benefit of the customer you understand, enhancements that will automatically link through the their own computers so that hey can immediately issue a KFI which will then in turn result in a ‘pre-populated’ mortgage application coming on screen with a DIP attached.
What a result for the FSA. Automated mortgages with no involvement of people they have to regulate. So back to the situation only 4 years ago when they only had to regulate a few hundred large financial institutions.
Am I being fanciful here or could this come about?
May 22nd, 2008 at 4:03 pm
I have 20 yrs experience as an independent Ins.Broker
I was speaking to another broker who was telling me he had had a visit from the FSA.He was asked by them how he handled claims.He told them if it was over £5,000 he would appoint a loss adjuster,the person from the FSA asked “What is a Loss adjuster”!!!! and they are telling us how to do our job !!
June 2nd, 2008 at 3:39 pm
Which planet does Jake B live on? Who is he to judge that he has never had the best advice from a mortgage advisor/IFA.
Most appropriate mortgage product does not necessarily mean ‘cheapest/lowest rate’
Too many people have the attitude, as Jake, that the mortgage is something spoken of in total isolation,without having to take into account how changing the mortgage will impact on other financial ares of personal financial planning.
Unfortunately I have in my years as an advisor have had to combat the ‘advice’ given by the Jakes of this world to potential clients.
I suspect Jake ‘knows everything about everything’. In fact wasn’t he a Harry Enfield character?