Much of the media in December is dominated by reviews of the year and the financial trade press is no different. The year’s winners and losers are decided, the headlines of the year are recounted and performance in relation to previous years is calculated.
In many ways 2012 was a pretty forgettable year and while things may have improved somewhat from the dark days of 2009, the mortgage market is nowhere near out of the woods yet. But rather than add my musings to an already crowded selection of 2012 memoirs, I thought I would try and beat my fellow pundits to the punch by getting my 2013 predictions in nice and early.
Given some of the more negative headlines this year, you could be forgiven for thinking that networks are in danger of becoming obsolete in the next few years, but we obviously don’t share that doom-laden outlook. There may well be some consolidation among smaller institutions – as there always is in all parts of the mortgage market and other industries – but for many it will be a case of business as usual. We were able to boost our number of AR firms by almost a quarter in 2012 and will hoping to match or better this in 2013. What is certain is that brokers won’t just stay with their network if they don’t feel they are getting a fair deal. We’ve seen a number of firms vote with their feet this year after charging increases and this will continue if networks fail to act transparently.
In terms of overall AR numbers, there is nothing to suggest these will reduce in 2013. In fact, with continued regulatory pressures, the introduction of the RDR and the Mortgage Market Review looming on the horizon in 2014, it wouldn’t be a great surprise to see a number of directly authorised brokers seek the support of a network. There will always be a certain percentage of advisers who will want to handle their own compliance, but as the regulatory burden increases, they may find that valuable time that could be spent writing new business is being consumed with paperwork.
Another factor that could influence DAs to go down the AR route is the pressure on capacity in the professional indemnity insurance marketplace. Meeting PI requirements could also have a negative time management effect on businesses and, when coupled with the financial implications, brokers may find their needs better served by coming under the umbrella of a network.
With regards to the mortgage market itself it is difficult to make any accurate predictions, but the consensus certainly seems to be that there will be a slight uptick in gross mortgage lending. Much of this depends on whether the capital drawn down from the Funding for Lending scheme starts finding its way to borrowers in the shape of banks regaining their appetite to lend, but hope springs eternal. Bridging the UK’s cavernous protection gap will still remain a high priority in 2013 and if mortgage volumes remain modest, we may well see more brokers diversifying into related insurance products.
Richard Adams is managing director of Stonebridge Group
