Exiting Clauses in a Mortgage Network Agreement (you should think before you sign on the dotted line)gary
So here’s the scenario, you’ve found what you are sure is the right financial services network for you, the terms look fine. You probably haven’t spoken to us or you wouldn’t be about to get into the mess you’re just about to get into, but let’s leave that aside for now.
The pearl of wisdom I’m about to impart is whatever else you do, stop now and look at any termination clauses in the contract. It has come to Which Network’s attention recently that a number of large networks now have very aggressive termination clauses in their AR agreements. It may be because the market is holding up and they have decided that they would quite like to hang on to mortgage brokers who are profitable or maybe the network or part of the network is up for sale and they want to keep AR numbers up to impress prospective buyers, but for whatever reason make sure any agreement hasn’t got a distinctive sting in the tail.
Of course this doesn’t matter if you have researched all of the 20 or so alternatives, analysed the value they give by comparing the commission and proc fees they give, against the retention and/or monthly fees they take and then adding in feedback on the effectiveness and flexibility of their software and compliance regime and overall satisfaction levels of current and past AR’s and therefore are 100% confident that your choice of network is going to be forever. This of course means that any termination clauses in your agreement are totally irrelevant since you’ll never have to leave anyhow!
But remember even if all the above were true, there is more than one large network whose current backers are currently trying to offload parts of, or have said openly, they are always considering their options! So if this was to happen and you didn’t like the networks new boss, who was definitely not “same as the old boss” as Roger Daltrey would say, wouldn’t it suddenly be important then?
Any company that has AR’s, RI’s, Members, associates, whatever you like to call them, has to a protect itself against the odd rogue broker who leaves and then swiftly tries to re-broke all of his protection business or doesn’t honour any existing debts he has. This is fine and typically a network would have a 3 month exit clause, where an AR has to give 3 months notice and be fully paid up when they left but having said that I am aware of one network that not only requires a 3momth leaving period, but also immediately freezes all proc fees an commissions, hardly fair play. Based on more than 20 years’ experience in financial services, I firmly believe that for the majority of mortgage broking firms, using a network is the best and easiest way forward but make sure to scrupulously study (maybe with the services of a solicitor) any business contract before you sign it.