So it won’t be long now until the world changes again for us brokers. The OFT will hand over the reigns of consumer credit regulation to the FCA and there will be all sorts of new changes to get used to. Yes, the grim reapers are already calling it the death knoll for the renaissance of our industry while some secured packagers are shaking in their boots about how the secured loan world will look post regulation. All the normal reactions then, nothing new there.
But hang on, you’re a mortgage broker so why should you give a proverbial? Well listen up, and let me tell you how my vision of the next few years will look.
Around 50% of mortgage brokers will just carry on remortgaging their clients onto the best deal they can find. They will not consider whether a secured loan may be cheaper as they heard years ago that secured loans have high rates and high redemption penalties. They didn’t realise that as a result they may end up costing their clients hundreds or even thousands of pounds per month. Much of this will be down to ignorance of course, but in law ignorance is no defence. They will get away with it, maybe even for some time before the regulator catches up with them, but in the meantime tens of thousands of people will get the wrong advice from thousands of brokers.
What they should have done is a simple cost comparison exercise requiring just a pen, a calculator and some paper. Even simpler they could have used a secured loan/remortgage comparison calculator like miloanbroker.com and working out which option would have been cheaper, but they chose not to. Why? Because they are dinosaurs, and dinosaurs as we all know, stomp around causing chaos and then eventually die off. But not before offering bad advice and making lots of people a lot poorer along the way. Those clients of course will one day be targeted by a claims firm that will promise to get them all of their money back, and more, and probably will. That is bound to have an adverse effect on the cost of PI insurance as well as needlessly opening up the floodgates to the bottom-feeders that have turned financial reclaims into a multi-billion pound industry and wreaking havoc along the way.
More secured loans from mortgage brokers and IFAs complete through our firm than any other in the UK, because we bang the secured loan drum harder than anyone else and have been doing so for longer, and we only deal with intermediaries. More than 5500 of them to be precise, and for the astute mathematicians that’s over half of the industry… the half that does check the cost savings of a secured loan before marching off down the remortgage route without even so much as a look over the shoulder. Some of the brokers in that half completed nearly £4m of secured loans with us in October and we paid them over £100,000 for their introductions to us. The other half didn’t get any commission because they didn’t give us any business.
The ones that did get the commission will get more commission in the future and will save their clients money and stay on the correct side of the law because they will continue to do compare the costs of a secured loan before rushing headlong into a remortgage. They will become hyper aware of the need to give their clients best advice and it will result in extra business for them. Their client will remain with them and they will eventually remortgage them at a later date when convenience and cost allows.
It’s for these best-advice mortgage brokers and IFAs that we built our remortgage comparison system into miLoan. Our business thrives on them and they thrive on it so we make it our business to make dealing with us as simple and as effective as possible.
Post regulation I believe that secured loan introductions from mortgage brokers to secured loan packagers will grow exponentially over a period of years as they seek to find expert packaging advice from those of us who have made it our business to understand it well.
For the dinosaurs that still refuse to consider the secured loan option in the post-regulatory world, I suggest you invest in a good quality spade: you’re going to need a deep hole in which to hide.