Welcome to the newsletter from HomeLoan Partnership, designed to keep you up to date with topical market news, sales ideas for your business and developments in the HomeLoan Partnership proposition.

Often criticised for having a bark worse than its bite, and focussing on large firms whilst allowing small Directly Authorised brokers to trade as they wish, the FSA is now overtly publicising the enforcement action taken with smaller firms. There seems to be a determination to pursue those brokers that blatantly break the rules even to the point of committing or endorsing mortgage fraud.

June's regulation round up from the FSA confirmed that it had banned six brokers in London for submitting false mortgage applications backed by false documents. A further broker in Belfast was banned for knowingly submitting false applications to lenders.

Another broker was fined £10,500 for failures in the sales process that he used for self certification mortgages.

  Time for an adviser register?

There have been calls for a register to include all authorised mortgage advisers to ensure that they cannot drift anonymously from firm to firm and to reduce the likelihood of unqualified introducers acting as advisers. This is long overdue and such a register would allow those involved in bad practices to be clearly identified and banned from advising.

  What action should you take?

Stay informed as to the expectations of the regulator. If you are an AR then your principal firm should issue regular guidance to you - if they do not then consider whether they are offering you the protection that they should. If you trade as a directly authorised broker you should receive the same guidance from your compliance service.

If you have not subscribed to one then I would advise that you do so but also you should ensure that you receive and read the regulation round up. You can subscribe to the 'Regulatory Round Up' email here.

Dealing with lettings agents and tenants

Selling life cover starts with the need to demonstrate insurable interest - effectively the loss that would be incurred on death - and then protecting it with appropriate cover.

  Opportunities with tenants

Many brokers ignore opportunities to work with lettings agents to provide cover for their tenants on the basis that there is no loan in place to insure. Consider the following:

  Couples renting

A common scenario is that a couple will rent whilst they save for a deposit to buy a property, sometimes for several years. They have an aspiration to own their own home just like anyone with a mortgage and in the event of either death it is highly unlikely that the surviving partner would be able to afford to do so. Furthermore, they probably could not even afford the continuing rent!

The risk is even greater for families renting as they may find themselves homeless (or on restricted benefits) in the event of the death of the income earner.

You can deal with this with a joint life term assurance covering the value of the property that the survivor would need to buy.

A joint life, first death LTA policy for £150,000 for a 25 year old non-smoking couple on a 25 year basis would cost from £10.88 per month for life cover only and from £38.88 with full critical illness.

  Singles renting

Whilst there is no defined need for life cover for a single person, however you can justify the sale of a critical illness policy for either continuation of rent or house purchase in the event of a claim. Note that is often only marginally more to use a policy with full life cover included and on this basis it is justifiable to recommend this.

A single life Critical Illness policy for £150,000 for a 25 year old non-smoking male on a 25 year basis would cost from £23.19 per month and from £23.42 with full life cover included.

Make sure that you tell your clients to contact you when they are ready to purchase a property in order that the life policy can be adjusted to the appropriate sum assured. You now have a potential mortgage lead as well. Keep in touch with them regularly to make the most of future opportunities.

  Permanent Health Insurance

In both instances you could also recommend Permanent Health Insurance - a massively undersold product - to protect the liability of ongoing rent and future mortgage payments.

An example policy for the same 25 year old male for £1,000 per month cover on a 13 week deferment would only cost from £11.91 per month.

Remember that there is a great benefit to landlords and lettings agents if they know that their tenants will still be able to afford the rent in the event of death or disability, along with the obvious benefit of any commission share you agree.

Why not contact your local lettings agents to discuss with them how you can promote these policies to their tenants.

* Quotations sourced via Assureweb from HomeLoan Partnership's panel of 10 leading life companies.

With mortgage volumes dramatically reduced in May, advisers have turned to lead generation to chase the business that remains. However many report that these are frustrating at best and at worst a complete waste of time, effort and money.

Quality can vary from provider to provider, often depending on the method used to produce the lead, time spent to validate it and the speed of delivery. Most leads originate from internet browsers and therefore it should be recognised that these need to be followed up in an appropriate way. Prices vary also, broadly in line with the quality of the applicant and whether the lead has been 'worked up' to improve conversion.

  Here is our quick guide to working with lead generation

1. Work as closely as you can with the provider to develop a long term relationship. You will benefit from their experience and your lead quality should be good.
2. Understand what a prospect expects when they submit an enquiry through the internet. There is likely to be an expectation of a speedy response and prospects will be qualifying information that they have seen but may not understand.
3. Follow up quickly! Experience shows that an immediate contact with the prospect increases the chance of them doing business with you, remember that they may well have placed an enquiry through another site which may be on its way via another lead provider to one of your competitors.
4. Be persistent. If you don't get through straight away leave a message, send an email and keep trying - people are busy and the fact they don't reply does not mean they are not interested.
5. Have a process in place. Many good salespeople are terrible administrators, you need to log leads and track your progress with them. This will also help if you need to apply for a refund and helps you to objectively assess the results. Some leads take months to mature and you will find yourself doing business with people that you may have thought were lost causes at the time.
6. Sell your service rather than a product. A prospect can find products on the internet and a pitch from you that revolves around the cheapest rate you have available may not be enough to secure an appointment. Sell the benefits of what you will do for the client during the process.

  A couple of final points.

You cannot assess the success or failure of a marketing strategy based on an inadequate trial, buying 5 leads over a week and dismissing the provider as poor is not a fair test. Finding out what does not work is part of the process of finding what does!

“I am not discouraged, because every wrong attempt discarded is another step forward” - Thomas Edison

Most businesses have a 'cost of sale' - the cost of materials, labour or marketing that brings them the business they need. Mortgage brokers have had the luxury of a buoyant market for many years but you may now need to accept that you have to speculate to accumulate!

Finally, where it comes to facing the fact that not everyone you call will want to deal with you an old maxim comes to mind:

“Some will, some won't, so what, NEXT!”

An area where brokers could improve their income considerably is that of the ancillary General Insurance areas. What do we mean by that?

You should ensure that you have a relationship where you can place everything from Fleet Insurance to Commercial cover. The commission rates are generally lower than for buildings and contents but premiums are often substantially higher. It also introduces you to a whole new set of prospects for mortgages.

HomeLoan Partnership provides brokers with an introducer relationship for 14 different types of ancillary general insurance.

It is fair to say that in any volatile market there will be winners and losers - to use an analogy, “strong winds will unearth the trees with the weakest roots”.

There are many businesses bearing the brunt of the downturn in the mortgage market at the moment, lenders, builders, estate agents, packagers, service providers and brokers alike.

Just this week it has been reported (Estate Agency News) that Humberts Estate Agents have sold their entire business and brand to The Mercantile Group.

Rightmove saw listings from 300 estate agents disappear in May alone, extrapolated that would mean closures of thousands of branches by year end. They also report that there are 15 sellers for every buyer.

Packagers and lenders have continued to shed staff, trying to reduce their fixed cost base to the point where it matches business being received, impossible in some instances when the gearing in the business is high. The result is enforced sale or liquidation.

  So where is the good news?

Ultimately, businesses that have the right cost base - right down to sole traders that have low overheads - are well placed to survive the credit crunch. Ironically the need to cross sell and approach new products should result in a stronger business model when the market recovers.

HomeLoan Partnership has faced the issues in the market with a positive perspective, promoting the strong proposition and support and has grown consistently over the past 6 months, adding around 40% of new firms since January 2008.

We have introduced new products and services for advisers to cross sell and have not had the need to change our charging structure where others have been forced to do so.

Our proposition is also good for your cost base, no monthly network fees, no set up costs, retention is taken as you are paid so our interests are totally aligned.