One of the key positives for the mortgage advice sector – and specifically in terms of consumers’ access to advice – is that, as long as you secure the necessary qualifications and authorisation, anyone can do it.
By that I mean that you don’t need to be part of a huge corporate machine to be able to provide quality advice. You can be a one-man/woman band who perhaps works from home, or in a garden office, and you can deliver great quality advice to a range of different clients, and by doing this you can build a very successful business.
Now, this might give rise to a criticism of the mortgage advice market that it is in some way a ‘cottage industry’ but again, nothing could be further from the truth, because while you can plough a lone furrow and do very well, we also have a wide variety of advisory practices – small, medium and large – who are all not just able to survive but thrive. In that sense, it’s very important we have those larger firms because – for those who wish to grow and develop into something more than themselves – there are plenty of examples to follow about how you might go about doing this.
At the same time, and something that has perhaps been overlooked by some, is the fact that there are a range of differences between the larger and smaller firms. After all, this is why networks, mortgage clubs, distributors, etc, exist because they can provide support across any number of areas which help level the playing field across the market, especially when it comes to the economies of scale that the larger firms operate at.
From a business sense, the differences between the bigger and smaller firms could be considerable. However, one area which tends not to ‘discriminate’ between them – but perhaps should – is around regulation. Regardless of your size, at its core level, advisory firms are all subject to the same regulations and (part of me) believes that’s right when it comes to standards, protections, the advisory process, etc.
A consumer should expect to receive the same sort of minimum service standards which ever advisory firm they use, and firms should not be allowed to get away with practices which are not in their client’s best interest simply because they have been allowed to by the regulations.
But, given the larger number of smaller advisory firms that exist in our market – and we are the Principal for many smaller firms who seek a network home – my view is that the regulator has not always understood just how severe the regulatory impact of their rules/changes to rules can be on smaller operators. When you have no compliance department to fall back on, when you don’t have lawyers on tap to tell you how new rules will impact on your business, when you can’t simply dip into your substantial reserves/resources and make the necessary changes in double-quick time, then the stress of those regulatory changes is added to considerably.
Now of course many smaller firms will rely on networks, or third-party support services to help them deliver on this, and will pay for the privilege. However, with a more finely-tuned regulatory approach which gives far greater consideration to how rules land on smaller firms, there is certainly the opportunity to make the whole situation far easier for these individuals.
It’s for these reasons that I was pleased to see that the FCA now has a project specifically looking at the impact on smaller firms of its rules. A survey is to be conducted and firms will be interviewed, and hopefully what will come out of this is a series of recommendations that the regulator can take up, which informs the way it introduces its regulations and indeed monitors and policies the sector, plus perhaps also informs how it handles potential breaches of its rules and the action that is to be taken thereafter.
We want smaller firms to continue to be established, to develop and to be successful. An acknowledgement that they are different, and perhaps in some areas, should be treated differently, would be a positive step.
Richard Adams is Managing Director of Stonebridge Group