With the ‘Treating Customers Fairly’ initiative (TCF) and other regulatory issues bringing the financial services industry’s obligations to their clients to the fore, different business models are coming under scrutiny.
Providing a complete and streamlined service in any sector brings huge benefits to consumers and businesses alike. Estate agency firms that have mortgage intermediaries within their branches can break down the barriers between estate agency and financial services sides of the property transaction, offering the customer a comprehensive and joined up property finance service.
Mortgage intermediaries integrated into the estate agency team will have detailed knowledge of the local property market, as well as upfront limited information about the client and the value and type of properties they are interested in. This upfront knowledge will help streamline the process, improving the advisers understanding of the client’s needs, particularly surrounding the client’s potential expectations concerning the type of property they can afford.
Critics of the integrated mortgage adviser model have suggested that there may be problems complying with TCF initiative. However, there is no reason why such a company would be any less committed to compliance, regulation and the spirit of TCF. Where the intermediary is employed, behaviour and process can be brought under strict company systems and controls. The only distinction here is that the loyalty of the mortgage intermediary lies with the company.
At Spicerhaart, although the financial advisers have recently been integrated to operate under the brand of the branch, the company retains its directly regulated status as a separate financial arm, with its own compliance regime.
Maximising opportunity
The proposition of estate agency based financial services is to ensure that the consumer is receiving the best possible service while maximising opportunity for both sides of the business. Regulations stipulate that the range of products on offer must be representative of the mortgage market as a whole in order to use the term ‘independent’. The customer proposition is a compelling one, with all services available under one roof. It is up to the customer if they would prefer to seek alternative financial advice.
Many smaller estate agency firms prefer to use self-employed or outsourced mortgage and financial advisers because it is perceived as easier for them, without cost and compliance risk and regulatory responsibility. However, larger estate agency companies that are able to embrace compliance and TCF generally operate with an employed mortgage adviser model. Preference really does depend on a firm’s position in the market.
Lead source
An estate agency is naturally a perpetual source of leads for the mortgage intermediary. Business levels should not be dependant on gross house sales within the agent where opportunity exists for mortgage leads in the form of applicants and vendors. The key is for the mortgage intermediary to integrate with the estate agency team and capitalise on the opportunity that exists through day-to-day activity within every estate agency branch.
Ultimately though, despite self-employed intermediaries needing to make themselves available at times best suited to the customers, the fact that they are ‘freelance’ will affect the way they apportion their time and services. As a result they may spend less time in estate agency branches; therefore customers and estate agency staff won’t always have access to an intermediary.
An undoubted benefit of in-house brokers is that they work the same hours as the agents themselves, including Saturday – the busiest day of the week. Those customers who cannot come in on a weekday are therefore guaranteed access to financial advice. Self-employed intermediaries may not necessarily be prepared to work on weekends.
Clearly, both models have their advantages and both are certainly worth considering. When all is said and done, estate agency firms must make the decision on which path to follow based on their operational systems, resources and future strategies for development and growth. With all else equal, customers must decide which service out of the two best suits their needs and requirements.
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