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.

As we move into 2009, it seems evident that we face quite a few of the issues from last year with some others thrown in just to test the resolve of broker firms.

The base rate has moved to a point now where a mortgagee exiting a two or three year fixed is likely to see a reduction in their payments rather than the 40% increase they would have seen last year. Just as well, as the reduction in property values, compounded by down valuations from nervous surveyors mean that many could not remortgage even if they wanted to.

It seems obvious at the moment that 'duel pricing' is going to be around until true competition returns and that branch based products can provide some customers with access to mortgages where the intermediary simply cannot do so.

So how do you take account of these products when considering your options for customers? The simplest no cost option is to refer to the tables on money made clear, the FSA's own customer information portal. The other option is to subscribe to a system that does have these products.

At this point most mortgage brokers will be muttering about the loss of the procuration fee! It is our opinion that advice may need to move to a true fee based model where the prospect is given the option of including these products with an explicit fee for the work involved.

It should be noted that John Charcoal has just announced that they will be ending their free advice option and moving to a fee based model.

This is nothing new if you routinely charge fees anyway, if you don't then you have decide what value to place on this unbiased and professional advice. The advantage is quite clear in saving the client from searching the market themselves, helping them in the application process and representing them throughout.

You should also be able to secure any life and general insurance cover that arises with a firm agreement from the client that they arrange this through yourself.

The other area where brokers have to adapt, is the need to sell a wider range of products to customers and re-visit the client bank for this also. Accepting a 'total value per client' principal is a step towards maximising all opportunities.

There is a distinct advantage in being a member of a network with the foresight to recognise these risks and present solutions to help brokers to survive and prosper.

The competition commission has decided to press ahead and ban the sale of PPI products at the point of sale. Its final report into the PPI market has been released this morning and confirms that the commission will order firms to wait 7 days before they are allowed to contact customers to sell the cover, not 14 as was originally intended.

Consumers that want PPI can contact the provider to purchase it after 24 hours, but the sale of single premium PPI is to be banned altogether.

Distributors and brokers will be required to provide a 'personal PPI quote', which will clearly state the cost of the PPI policy individually and when added to the credit product.

If this is not given at the point of sale, the credit provider must provide it if they subsequently contact the customer to offer PPI.

The seven-day prohibition period starts from the later of the conclusion of the credit sale or the date on which the personal PPI quote is provided to the customer.

Figures released recently by the ABI show that in November 2008 there were 19,105 new unemployment claims on PPI policies. That is an increase of 118% from 8,772 in November the previous year. This massive leap in claims shows that PPI is helping many people through a difficult financial period.

Nick Starling, spokesperson for the ABI commented :- “We welcome the reduction from 14 to 7 days for the point of sale ban which shows that the Competition Commission has acknowledged our fears about the risks to borrowers. However, we remain extremely concerned that the fundamental risks to borrowers have not been addressed. Our job now is work with our members and the regulators to minimise these risks and make it work. The devil will be in the detail.”

The Commission's final report follows a 16 month investigation into the PPI sector, where it found consumers were being overcharged by £1.4 bn due to lack of competition.

It seems that there are a growing amount of companies offering to claim back the cost of mis-sold (generally single premium) PPI policies. The main culprits in this would have been the larger lenders providing second charge loans and often overselling these or implying that the loan may be conditional on the sale of the policy.

The client would not usually be charged an upfront fee, with the companies working on a no-win, no fee basis and taking a percentage of the claim awarded.

This can present sales opportunities to brokers referring these clients as they will receive a referral fee and the clients still need good quality cover and often this can be provided at a fraction of the price.

HomeLoan Partnership has briefed brokers on this marketplace as another potential route to meet prospects and diversify.

Estate agents are reporting greatly increased numbers of valuations and instructions now that we are a few weeks into the New Year. It seems that many vendors have decided that now is the time to either sell and rent (not much use to the market) or to take advantage of the reduced house prices and trade up.

Some estate agents have also commented that they are getting more enquiries from people that sold properties a year ago in favour of renting and are now looking to enter the market again, again taking advantage of price falls. First time buyers could also be tempted back into the market soon as the price of a typical one or two bedroomed house is now within their reach, assuming they have deposits!

In this equation we have to recognise that we need buyers as well as sellers (!) and it is too early to call this any kind of revival but lets take it as a positive sign.

Reminder about HIPs

Don't forget that you can get involved in the early stages of the sales process with a prospective seller by offering free advice on the purchase of an independent HIP. All properties marketed for sale need to have a HIP ordered before marketing commences. This presents you with an early opportunity to discuss mortgages. Learn more by viewing the HIPs: a seller's guide.

Check to make sure that any HIP provider that you consider is a member of the Property Codes Compliance Board (PCCB). This indicates that they have signed up to the voluntary HIP standards code and have adequate PII in place.

Open the door with ASU

With all sales processes you must have a problem to solve and a solution to solve it with. The salesman is effectively the catalyst that presents both and then facilitates the transaction.

Latest figures by the ABI confirm that notified unemployment claims soared for PPI, MPPI and credit card PPI in November and reached 19,105, up 118 per cent on November 2007. Previously, claims in September 2007 were 69 per cent up year on year and October 113 per cent up.

This demonstrates the worth of the product and insurance companies report that sales have risen considerably - are you missing out on this marketplace.

Sales of products like ASU should be regarded as a 'sprat to catch a mackerel', a reason to discuss overall protection with a prospect and a way to acquire clients for the future. Prospects are likely to respond to an advert, letter or leaflet drop when the problem (and solution) are particularly important to them.

Another product worthy of consideration is the relatively new Mortgage Lifestyle and Protection Plan by LV= - essentially a hybrid between PHI and ASU. More expensive and therefore better suited to white collar workers and the A & B demographics but it represents longer term protection and pays commission in line with PHI.

If you can find appropriate prospects for this product then it is likely that a case a week will solve your credit crunch blues!

I can hear the comment “that's because she is using his credit card!” However, this is the findings of research carried out by Tenon Recovery that reported that their male applicants for bankruptcy exceeded female applicants by two and a half times to one.

This may be balanced by the fact that women are suffering redundancy at twice the rate of men but women are also more inclined to accept advice and 55% of female business owners follow a structured business plan as opposed to 34% of males.

Debt advice and the ability to refer prospects to professional advisers represents another source of potential business. People entering debt management may have already lapsed valuable protection and reasonable premiums are often allowable prior to payments to creditors. Whilst you may be wise to issue this business on non indemnity terms it increases your activity, client bank and potential for referrals.

The FSA has reminded directly authorised firms in the latest regulatory round up that they have until 31^st March to apply to cancel their Part IV permissions without incurring another years fees.

Any firm that inadvertently trades through the 31^st March deadline will be liable for the full fee charge for 2009/10 when fees become due in July.

There has been much speculation that fees will need to rise as the costs are distributed amongst less firms remaining in business and the FSA will give the first indication of these fees on February 12^th when it updates its online fee calculator.

What can you do about your fees relative to your falling income?

You have the option to become an Appointed Representative and benefit from the support that this should provide, allowing you to focus on finding new customers and selling products. A good proposition (like our own) will allow you almost all of the freedoms you currently enjoy and reduce your overall administration and risk of sanction.

As HomeLoan Partnership operates with no fixed monthly membership fees (effectively 'pay as you go'), the charging structure is always relative to your business levels.

So, if you have any doubts as to whether DA status is right for you for 2009, make sure that you check the Appointed Representative alternative - don't simply run out of time and trade through 31^st March!

HomeLoan Partnership have extended their General Insurance panel with the addition of Legal & Generals products on the GIology platform. We have negotiated a commission payment of 50% indemnity with a lower trail commission as we feel this will help brokers through what could be a tough year.

We have also extended special terms for experienced brokers joining HomeLoan from either a network or a directly authorised background. If you have been considering a move but have been adopting the 'better the devil you know' approach, now is the time to do something positive for the New Year.

Call us for details.