Mortgage Introducer November 2023 by Key Media

Champion of the Mortgage Professional

MORTGAGE

INTRODUCER www.mortgageintroducer.com

November/December 2023

ROBERT SINCLAIR An industry icon on lobbying, Labour, and loving work

5-STAR LENDERS 2023: Who are the best lenders in the business?

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15/11/2023 6:43:19 am

EDITORIAL

COMMENT Managing editor Paul Lucas paul.lucas@keymedia.com Editor Simon Meadows simon.meadows@keymedia.com News editor Jake Carter jake.carter@keymedia.com Senior news writer Rommel Lontayao rommel.lontayao@keymedia.com Commercial director Matt Bond matt.bond@keymedia.com Campaign coordinator Raniella Alonzo raniella.alonzo@keymedia.com Vice president, sales Chris Anderson Vice president, production Monica Lalisan Production coordinators Kat Guzman & Loiza Razon Content editor Kel Pero Designer Joenel Salvador President, Tim Duce Director, people and culture, Julia Bookallil HR business partner, Alisha Lomas-Oliver Chief information oﬃcer, Colin Chan Chief revenue oﬃcer, Dane Taylor CEO, Mike Shipley COO, George Walmsley

KM Business Information UK Ltd Signature Tower 42, 25 Old Broad Street Tower 42, London EC2N 1HN www.keymedia.com UK ∙ Canada ∙ Australia ∙ USA ∙ NZ ∙ Philippines Mortgage Introducer is part of an international family of B2B publications, websites, and events for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL cmpadvertise@keymedia.com

Family ties

any of us may feel that our colleagues are like family – after all, the hours spent with them over the course of a week can, in some cases, be many more than we spend with our own flesh and blood throughout a whole year! There is, too, the camaraderie we share with fellow workers, particularly in more stressful times – and there has been no shortage of those in the industry in recent years. Facing adversity and working toward a common goal can be incredibly testing – and bonding – in a way that familial bonds don’t always experience. Imagine then, if your colleagues were actually your family … if a parent were your boss or sitting alongside you in a boardroom, as a fellow executive – or, more diﬃcult perhaps, if you were answering to your sibling, who had superiority in a company hierarchy. It wouldn’t be an easy task. But in this edition of Mortgage Introducer, we get up close and personal with those who have overcome the evident challenges and work, often side by side, in the same industry. What is their secret to maintaining family and workplace harmony, and how do they negotiate the potential pitfalls so that familiarity doesn’t breed contempt? Their stories are both fascinating and inspiring. Elsewhere in the magazine, the family theme filters through these pages. We meet industry icon Robert Sinclair, who is chief executive of the Association of Mortgage Intermediaries. He talks about his upbringing, with fond memories of his parents. And for our My First Deal feature, Michelle Lawson of Lawson Financial takes us back to the start of her career, reflecting on her early days as a mortgage advisor. She was encouraged into the industry by her mother, who worked in financial services. Perhaps blood is thicker than water, after all…. It is all, perhaps, quite timely. With Christmas fast approaching, many of us will be committed to spending time with our relatives – for better or worse! Whatever you’re doing, the team at Mortgage Introducer wishes you a very Merry Christmas – and a sparkling and successful new year.

MORTGAGE PROFESSIONAL AMERICA mpaadvertise@keymedia.com

Simon Meadows

MORTGAGE PROFESSIONAL AUSTRALIA claire.tan@keymedia.com AUSTRALIAN BROKER simon.kerslake@keymedia.com NZ ADVISER alex.knowles@keymedia.com Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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NOVEMBER 2023

MORTGAGE INTRODUCER

15/11/2023 6:43:27 am

MAGAZINE

WHAT’S INSIDE

Contents 4 Market review 8 Advice review 11 Networks review 12 General insurance review 38 Protection review 40 Recruitment review 41 Technology review 42 Second charge review 43 SF Introducer review 14 Cover feature Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, reflects on his work – and future plans 18 Lloyd Cochrane: Interview NatWest’s head of mortgage proposition on helping its customers with energy efficiency 21 Special Report Mortgage Introducer’s 5-Star Lenders 2023 reveals who’s setting new standards in lending commitment

ROBERT SINCLAIR

LLOYD COCHRANE: INTERVIEW

26 Roundtable In association with NatWest, Mortgage Introducer brings together five industry experts to discuss green mortgages 32 Interview: Family Mortgages Meet three families who work together in the industry harmoniously 43 Specialist Finance Introducer Steve Cox and Damian Thompson from Fleet Mortgages share their industry insight 48 My First Deal Michelle Lawson from Lawson Financial recalls her early days as a mortgage adviser Cover photo: Association of Mortgage Intermediaries

5-STAR LENDERS 2023

MORTGAGE INTRODUCER NOVEMBER 2023

INTERVIEW: FAMILY MORTGAGES

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15/11/2023 6:25:14 am 04/10/2023 16:34

REVIEW

MARKET

The era of ‘future-proofing’ Mark Blackwell COO, CoreLogic UK

hile we’re still waiting to hear when the country will go to the polls, it’s evident that the Conservatives’ political bid for votes is aimed at the traditional Tory heartland. Central to their plans is a rollback on net-zero targets virtually across the board. The argument for this approach appeals to the older and wealthier in society. It will take the pressure oﬀ those with commercial and rental property to carry out expensive upgrades to meet reduced carbonemission targets. It also frees up big energy companies to continue drilling for oil, a valuable commodity at a time when energy independence is acutely important for the UK. In turn, that profit is recycled back into economic growth, and allows the energy behemoth to continue to pay out large and regular dividends. The appeal to pensioners is compelling. While the policy decision isn’t popular among the young, there is an element of practicality involved. Delivering on the existing targets will be almost impossible simply because not enough time was given to make the necessary changes in the first place. There is also the state of the economy. If we follow the policy’s eﬀect through the chain, it will ultimately mean that the end consumer pays less. It will keep energy prices lower for longer, feeding into cheaper goods and service (in theory). For the housing market specifically,

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the big announcement within this broader context was the proposal to ditch the imminent deadline for landlords to bring privately rented properties up to EPC band C. The government’s thinking is pitched to appeal to landlords, who ought to feel less financial pressure to pay for expensive property refurbishments at a time when mortgage payments are ballooning. It’s being pitched as good for renters, too; with the removal of landlords’ need to invest thousands of pounds, there’s less need to raise rents. In the speech the prime minister gave announcing this change, he said, “I know people in our country are frustrated with our politics. I know they feel that much gets promised, but not enough is delivered. I know they watch the news or read the papers and wonder why in the face of the facts as they have them, choices are made as they are. I know that they dislike Westminster game-playing, the short-termism, and the lack of accountability.” I’d point anyone interpreting the promise to ditch energy eﬃciency upgrade targets to these words. First, the policy is contingent on the Conservatives winning the next election. Second, the political theory supporting the supposed benefit of pushing net-zero deadlines back is the very definition of short-termism. It’s not just environmentally short-sighted; it’s economically short-sighted, too. Much wetter winters and flash flooding are not something to worry about in the future – they’re a reality now, as are record-high temperatures and localised drought. The eﬀect that this extreme weather has on the UK’s housing stock is already showing. Increased subsidence arises as foundations shift in very wet and then very dry conditions. Flash

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flooding destroys homes and wrecks livelihoods. Poor insulation means higher energy bills, not lower. Insurers and mortgage lenders are acutely aware of the financial implications of these increasing environmental risks. While some of that risk is priced into the market, a policy change that does nothing to keep a lid on that risk will necessarily mean higher premiums and higher mortgage rates. Costs are passed back to the consumer. What in the short-term looks like sensible economic policy could result in much worse economic performance in the medium term. There will be more damage to residential property in the coming years, with all of the cost implications that brings. There is a financial need to upgrade the UK’s residential property stock; this should not be conflated with frustrating environmental campaigners and practical inconvenience. It is worth noting, amidst all of this, that good landlords are aware of the financial imperative of bringing their portfolios up to EPC band C. The vast majority have already completed necessary upgrades – most critically, loft and cavity wall insulation, triple glazing, and proper draught exclusion. Heat pumps get the column inches, but for the majority of homes, they’re inappropriate – and this is particularly true of the country’s most energy-ineﬃcient homes. What the government could much more usefully have done had it really been interested in delivering long-term financial and environmental benefits would have been to lay out very clear guidelines on what specifically landlords (and homeowners) should do to their properties to cut carbon emissions and energy loss. That would involve proper engagement with the valuations industry and RICS in particular. EPC assessors and retrofit experts must have the confidence, authority, and insurability to advise landlords on the changes to make. Most landlords still in the market want to invest in future-proofing the capital value of their rental portfolios. The key for the next government is to provide a clear way to do that. M I www.mortgageintroducer.com

15/11/2023 6:27:02 am

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NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:27:20 am

REVIEW

MARKET

Make use of the resources available Stuart Wilson chairman, Air Club

ollowing the publication of the FCA’s key findings from its multi-firm review on laterlife mortgage advertising and advice in mid-September, we held one of our regular “Breakfast with Stuart” meetings. It was interesting to think and talk about the timing of that publication with other sector stakeholders, particularly advisers, as it came hot on the heels of the move into a consumer duty world. Indeed, as you might expect, references to the consumer duty were front and centre within the review, with the FCA again reiterating what is expected of later-life lending advisers within this wider scope. I was expecting this review to be published a little later in the year; however, you can understand why the FCA opted for mid-September, just five weeks after consumer duty debuted, as it presented another opportunity to push home its key messages to later-life advisers at a time when there was a strong focus on all things regulatory. The review itself has been welldocumented, and I’m sure all active in the sector have read it and (hopefully) recognised what it is asking of firms and what changes it wants to see. Indeed, it specifically states that the firms it reviewed have all made changes as a result of its work with them, which might well tell you that every single firm might be required to do likewise. At the end of the review, the FCA sets out its seven expectations of firms

in light of both the consumer duty and the detailed rules it has in this space. At our meeting we were fortunate to have specialist adviser David Forsdyke take us through those expectations, given some expert analysis. As I listened to David, it was obvious that one theme was apparent in many of them: better communication. In fact, it’s there in the very first expectation – “communicate in a way which is clear, fair and not misleading, so that consumers are likely to understand communications” – but it’s also at the heart of a number of other areas on which the FCA wants firms to concentrate. So, of course, while advisers and firms must focus on being clear in the way they talk to clients – using plain English, making things easier to understand by using digestible tidbits rather than a mass of information – clarity is also required in the way we write to clients, in the explanations we give about why a recommendation has been given, etc. It’s also about client expectations. Communication, particularly in our space, should not be simply a handholding exercise that takes the client through to a solution they might think they need. We must, in the most appropriate way possible, question exactly why they think they need the money they do, what assumptions they might be making about their own situation, and how it might be changed by going down a certain route, and not simply become a sort of order-taker for clients who may be unaware of all available options. So this is a combination of not just the way we communicate but also what we communicate – and following on from this, it’s also about getting clarity from the client that they know exactly what has been communicated to them, they understand how it

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affects them, and they are clear on what it all means in the grand scheme of accepting a recommendation. Now, many later-life lending advisers will be reading this and thinking that they have spent their professional careers in advice doing exactly this and that they have all the required skills and processes in place to be able to ensure this, but again – as a number of FCA reviews have concluded – evidence of this has not always been there. Which takes us to another major theme that touches on a number of the FCA’s expectations and should always be worked upon by advisers/firms: documenting everything that has gone on within the client-adviser process. This includes everything from the information presented, to the format in which it is presented, to discussions around alternative options, to collating of specific client income and expenditure/wants and needs information, to outlining the way the firm is paid and what clients can expect post-completion. All the above, and so much more, needs to be readily available on the client’s file, shown to have been delivered to the client, and – back to that communication – recorded, with evidence, as understood and accepted. I’ve just touched upon a small number of responsibilities and requirements that are placed upon later-life advisers today. There are many more, and it’s not surprising that many advisers/firms are looking for support from organisations such as ours in order to keep on top of what they do, the ways and means by which they do it, and everything required to run a successful advisory business. It’s hard work, which is why organisations like us exist – because we understand that you can’t do all of this on your own. My advice is to make use of the resources available from Air and others that aim to make your advisory life easier, whether it’s technology, training, qualifications, or access to sourcing and products. You name it, there will be support available – to help you meet not just those increased regulatory responsibilities, but also your business ones. M I www.mortgageintroducer.com

15/11/2023 6:27:55 am

REVIEW

MARKET

Lenders must meet the volatility of our new age – not just to thrive, but to survive Jerry Mulle UK managing director, Ohpen

hile many of us may feel we’re due a break from the unrelenting need to adapt every three weeks (as it seems), it’s looking like we’re in for yet more change. Indeed, delivering his keynote speech at the Conservative party conference in October, Prime Minister Rishi Sunak actually said, “I have made my decision: we are going to change.” He went on to scrap energy-efficiency targets forcing first landlords and then homeowners to replace gas boilers with heat pumps. Landlords who had been preparing for widescale refurbishment projects to lift private rented property stock up to a minimum EPC band C were told that’s not happening now. But then again, who’s to say what will actually happen? The looming general election will determine who sits in government and the hue of their politics. The Conservatives are promising change. So is Labour. Rather than deliver on Sunak’s pledge to landlords, opposition leader Sir Kier Starmer has promised to “double down” on net-zero policies unceremoniously abandoned by Conservatives. Starmer argued that not to do so would leave those on lower incomes far worse off proportionately. Indeed, a recent paper from the Social Market Foundation argued that dropping EPC standard upgrades would leave renters

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paying up to £1bn a year more on heating through wasted energy. That has enormous implications for households’ ability to keep up with rental payments, triggering a different sort of challenge. Rising rent arrears lead to rising buy-to-let mortgage arrears, which in turn lead to more homes on the market and the potential that has to push prices down further. That then presents the question of capital buffers – for both borrowers and lenders. Will landlords see another about-face on energy-efficiency standards? Even if the Conservatives maintain a majority, will ministers vote through amendments such as these when they come before parliament? Such entrenched uncertainty makes contingency risk-planning double the work for lenders. Systems and product design are intrinsically linked to these sorts of parliamentary decisions. Along with UK Finance, mortgage lenders have spent years debating how to support the transition to net zero without disproportionately penalising borrowers who can least afford it. Risk, compliance, product design, and pricing under one regime with a specific objective become something totally other when the objective is altered. Lender boards are no doubt facing a Catch 22, do-we-or-don’t-we decision. Political policy is just one variable – monetary policy remains a key challenge for lenders. Despite mortgage rates having risen so significantly over the past two years, market pricing is still incredibly competitive. The stakes are very high – react to competitor product withdrawals too slowly and service levels can topple in hours. All this is set against a

backdrop of regulatory change. The consumer duty rules are still in their early days, but the regulator has been unequivocal concerning its determination to enforce its aim of good outcomes for consumers across financial services. The market is still developing its understanding of how the spirit of the consumer duty can and should be interpreted and applied. It’s likely that the regulator is in the same position, as enforcement action is necessarily reactive. The autumn budget statement is also due, and who knows what fiscal rabbits the chancellor has in his hat – particularly given the political stakes for this year’s statement. Jeremy Hunt has said there will be no tax cuts. And if previous policy announcements are anything to go by, fiscal drag is likely in for a repeat performance. Everything is up in the air at the moment, and it will be months or years before a new normal is established and settles, if one does. How can business leaders plan in such an uncertain environment? How can process, systems, and compliance be developed if the underlying need for change changes? The answer is not to plan for a future we are led to believe will come down the line. Recent events have brought that home all too painfully. The answer is to plan and be ready for change in and of itself. Where boards are still contemplating how to cope with today’s market dynamics, the need to get on with it is now urgent. Lenders must tackle the burden of legacy systems and the opportunity of new platforms to meet the volatility of our new age – not just to thrive, but to survive. M I

NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:28:06 am

REVIEW

ADVICE

Beyond the qualification – next steps for new mortgage advisers Hannah Bashford director, Model Financial Solutions and board member, the Society of Mortgage Professionals

aining a qualification in mortgage advice in the UK is a significant achievement, but it’s just the beginning of your journey to becoming an established adviser. While the career offers numerous opportunities, it also presents unique challenges that demand your attention and dedication. Let’s explore some of the more common challenges that mortgage advisers face after gaining their qualifications, and how to overcome them. REGULATORY REQUIREMENTS

The UK mortgage market is heavily regulated, which is essential to ensure consumer protection. But the regulations can be complex, and they are constantly evolving, so keeping up with the latest rules and compliance requirements is an ongoing challenge. It’s crucial that you prioritise continuing professional development (CPD) and seek guidance from experienced mentors and industry associations. You may decide to work under an existing firm that gives you access to established mortgage advisers or seek the services of a compliance network to help keep you up to date.

adviser even more critical. A broad range of varying lender criteria makes it challenging to find the right solution for each client, and the cheapest option is not always going to be the right outcome, so having a mentor off whom to bounce ideas will help you navigate the product maze and choose the right outcome for your clients in the early days. COMPETITION

The mortgage advice industry is competitive, and building a solid client base and reputation takes time and effort. To stand out, focus on offering exceptional customer service, giving highly personalised advice, and leverage your unique skills and knowledge. Developing a niche or specialisation can also give you a competitive edge. MANAGING CLIENT EXPECTATIONS

Every client is unique, and their expectations can vary greatly. Navigating these diverse expectations can be challenging. To excel in this aspect, practice active listening and set realistic expectations early in the client-adviser relationship. Be transparent about what is achievable and what isn’t.

MARKET CHANGES

The mortgage market is highly sensitive to economic conditions, and the interest rates charged on mortgage products change all the time. These fluctuations can influence your clients’ decisions, making your role as an

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TECHNOLOGY ADVANCEMENTS

The mortgage industry is continually evolving with the integration of technology. While technology can streamline processes, it also means that clients may have easy access to information, potentially leading them to question the need for a mortgage adviser. Embrace technology and use it to your advantage – showcasing the expertise and personalised guidance you can offer that a computer can’t. EMOTIONAL SUPPORT

This is one not to be overlooked. Buying a home is an emotional process for many clients, often involving significant life changes. As a mortgage adviser, you may need to provide emotional support as well as financial guidance. Developing strong communication and empathy skills is essential to supporting your clients effectively during what can be a stressful time. In recent months, many borrowers have been particularly worried about their financial security. As an adviser, your compassion and understanding of their situation will help to alleviate anxiety. WORK-LIFE BALANCE

Mortgage advising can be demanding, with fluctuating workloads and the pressure to meet targets. Balancing work with one’s personal life is a challenge that many advisers face. It’s vital to set boundaries, manage your time effectively, and prioritise selfcare to prevent burnout and maintain a healthy work-life balance. Obtaining your mortgage advice qualification is an accomplishment, opening the door to a rewarding career in financial advice. However, this is just the beginning; you will need allies and mentors to help guide you in becoming a truly competent and professional adviser. M I www.mortgageintroducer.com

15/11/2023 6:29:18 am

REVIEW

ADVICE

Buyers need valuable and meaningful support Michael Conville chief customer officer, Newcastle Building Society

veryone in the mortgage industry knows only too well how tough the past few years have been.The effects of the pandemic and the subsequent cost-ofliving crisis, a result of rising interest rates, means we are now helping many families simply stand still. I have always considered people to be at the absolute heart of what we do as a lender. Understanding their needs and wants informs our entire proposition. But that’s only half the equation; brokers are the other. Intermediaries sit at the coalface of what we do, and we know from talking to our valued partners that the needs and wants of their clients haven’t altered. Even amidst all the upheaval people have been through over the past three years, they still need somewhere safe to live, and many who do not have the security of tenure that homeownership offers want to access it. Despite the challenging market, with the support of our broker partners, we’ve achieved a lot this year that we hope facilitates these aims. Government data shows that in the 2021–22 financial year, an estimated 76 per cent of shared ownership purchases were made by first-time buyers. Over 69 per cent of all shared ownership purchases were made by people under the age of 40, and 35 per cent under the age of 30. In 2021–22, an estimated 56 per cent of purchases were made by one-adult households, the highest proportion since 2010. A quarter were made by

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two-adult households, and a tenth by households with children.1 Even though house prices are marginally down, it’s still the case that the amount of money it takes to buy a first home is significant for most people. Affordability is more of a challenge than it’s been in over a decade. The figures demonstrate just how effective shared ownership has been in this emerging context. Over 17,000 shared-ownership transactions were completed by large, registered providers and local authorities in 2021–22, an increase of 37 per cent compared to 2020–21. Demand for shared ownership lending is already rising, and we see this part of the market really coming into its own over the coming years. Together with our broker partners, we made the decision to enter the shared ownership market at the end of last year. It’s already proving a success. From a standing start, we are now over 500 cases, with gross lending on shared ownership at £58.3million. The scheme enables those on joint incomes of up to £80,000 or £90,000 in London to purchase an initial share of a property and pay rent on the remaining share. Buyers only need a small deposit and can increase their share in the property over time. It’s part of a whole host of solutions we have for first-time buyers that include Deposit Unlock and First Homes, as well as gifted deposit and joint mortgage sole proprietor schemes. But focus on this market is only part of the solution. Our other major development this year has been in the large loan sector, particularly with a focus on longer terms. After all, the flipside of house prices having risen steadily for over 20 years, for those already in homeownership, is that mortgage sizes have also grown.

Very low mortgage rates between 2010 and last year made affordability such that borrowers could take on larger loans in proportion to their incomes. Given the rise in mortgage rates over the past 12 months, a significant proportion of those in the middle of their lives – when children are at their most expensive and money at its tightest – are now in the position of having to make tough choices. Remortgaging from a 2.5 per cent fixed to a 5 per cent-plus loan has a significant effect on monthly payments and affordability calculations. It is not just first-time buyers who need support in this more challenging market. Second- and third-steppers also require support to keep them in their homes and transactions moving. Lengthening terms is one of the more plausible options for those needing to bring monthly payments into line with current incomes. That’s why we’ve recently increased what we consider as retirement age from state pension to age 70 and support borrowers up to age 80 (by the end of term). Extended terms for this remortgage don’t necessarily need to be retained come the next refinancing deadline. But in this market, having that option at the age of 45 could be the difference between having to sell the house and move the kids to a different school, and not having any of that disruption. We will do more over the coming months to offer greater support where it is needed, but we are determined to support buyers with the valued help we receive from brokers all the time. M I https://www.gov.uk/government/ statistics/social-housing-sales-anddemolitions-2021-22-england/socialhousing-sales-and-demolitions-202122-shared-ownership. 1

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15/11/2023 6:29:24 am

REVIEW

ADVICE

Why consolidation of learning is critical for mortgage advisers Gordon Reid business and development manager, London Institute of Banking & Finance

ome mortgage advisers feel that their learning ends when they have completed their initial qualification, as they feel they are more than competent to undertake their role at that point. However, the process of learning in fact extends into what’s known as the consolidation phase. Here, newly acquired skills and knowledge are solidified, practical experience is gained, and context for what has been learnt is acquired. THE IMPORTANCE OF CONSOLIDATING LEARNING

Without consolidation of learning, what has been learnt remains nothing more than theory. Practical experience is crucial for mortgage advisers for several reasons. First and foremost, navigating the complex world of mortgages requires more than just theoretical knowledge. It demands a deep understanding of real-world scenarios and challenges that clients face. Practical experience equips the adviser with the ability to assess individual financial situations accurately, consider the various options open to them, and offer tailored solutions that align with clients’ needs and aspirations. Being good at something requires a lot of practice, and thus practical experience helps advisers develop strong interpersonal and communication skills, enabling them to explain complex mortgage terms and processes to clients in a clear and accessible manner.

By dealing with diverse and complex cases, mortgage advisers hone their problem-solving abilities, learning to adapt their approaches to suit different financial backgrounds. This practical exposure not only instills confidence in advisers but also fosters trust with clients, who rely on advisers’ expertise to help them make one of the most significant financial decisions of their lives. ENTERING THE CONSOLIDATION PHASE OF LEARNING

So, what is actually happening during the consolidation phase of learning? Well, you are solidifying the knowledge you have gained whilst reading your textbook, watching your tuition video, or attending your training class. The neural connections in your brain are being strengthened, making newly acquired information more stable and less susceptible to being forgotten. Part of the process is to revisit and reflect upon what you have learnt. Without actually being conscious of it, this helps to ensure that knowledge becomes ingrained in memory, and what may have been a brief understanding becomes lasting wisdom. In other words, by revisiting and reinforcing learning, you are moving learning from short-term to long-term memory and creating the foundations for more advanced learning. THE BENEFITS OF CONSOLIDATION OF LEARNING

Consolidation of learning enhances our ability to retrieve information when needed. If learning can be thought of as building a library of knowledge and skills, then consolidation organises, categorises, and labels the content, making it more accessible and easier to retrieve and apply in practice. When dealing

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with a client, a mortgage adviser may have complex problems to solve or difficult decisions to make, and a wellconsolidated knowledge base provides the platform for critical thinking and well-informed decision-making. When you consolidate your learning, you engage in reflective thinking – you question assumptions and consider different perspectives. This critical reflection strengthens your analytical skills. Effective consolidation also builds confidence. As you review and understand what you’ve mastered, you gain a sense of accomplishment. DEVELOPING THE ABILITY TO ADAPT IN A CHANGING MORTGAGE MARKET

In this rapidly changing world, as exemplified by the mortgage market over the last twelve months, adaptability is a prized skill. Consolidation equips learners with the ability to adapt and apply their knowledge in diverse situations. Lifelong learning, which is an absolute necessity in the modern workplace, is greatly enhanced when advisers can consolidate and build upon their existing learning, ensuring they remain current, relevant, and competitive in the market. Consolidation of learning is not a single event, but a continuous process that underpins the ongoing development of skills and knowledge. Its benefits lay the groundwork for lifelong success. For mortgage advisers, whether they’re just setting out in the industry or have many years’ experience, consolidation of learning is essential, ensuring that their knowledge is both dynamic and evolving. Those who do not see ongoing learning and consolidation of that learning as an essential part of their role may struggle to meet the ever-changing demands of the marketplace. M I www.mortgageintroducer.com

15/11/2023 6:30:24 am

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NETWORKS

Be part of the solution Shaun Almond MD, HL Partnership

n my role, I speak to a lot of brokers about their concerns, and inevitably the topic of lender service tends to dominate many conversations. While there is a broad understanding of the difficulties that lenders face in maintaining consistent service, it’s not only processing times that have been concerning advisers. Much anger is reserved for those lenders who withdrew products suddenly during the period when rates were going up almost daily. Notice periods were almost non-existent and did not give advisers and their clients time to present applications, having accepted cases as DIPs. It is a natural reaction to not being in control of the situation and then having to tell your client that the deal you had proposed is no longer available. Not only is it embarrassing professionally to admit to a client that the deal you promised has gone, but there is also a loss of credibility when you try to replace it. Lenders did not cover themselves in glory, even though it should be acknowledged that swap rates were changing daily, and no lender can afford to ignore the downside of not repricing as rates change. What they could have done collectively was to manage their joint PR better by warning brokers and clients of the immediate consequences of increases in rates. Latterly, the industry has individually and collectively started to look at how it can provide brokers with a minimum notice period so that booking a fixed rate can be guaranteed. Some, like Tandem Bank, will guarantee a fixed rate is officially booked when an ESIS is produced. Others will only accept a rate as being booked when, post-

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DIP, a full application has been received and acknowledged. Brokers can help themselves by becoming more aware of the different funding options. To help them, IMLA and AMI have teamed up to produce an online guide aimed at helping brokers to understand lender funding, product pricing, and availability. The guide explains the different types of funding used by mortgage lenders and how the type and split of funding sources affect individual providers’ ability to respond to interest rate changes. STAMP DUTY

In the wake of two significant byelection defeats, speculation has begun to mount that the government might turn to offering sweeteners to the electorate in the shape of changes to inheritance tax and stamp duty, for example. Leaving aside the more contentious inheritance tax, stamp duty on property is regarded by most (especially homeowners and would-be homeowners) as a blatant tax grab. According to government statistics, stamp duty land tax (SDLT) receipts in the United Kingdom amounted to approximately £15.4bn in 2022/23, compared to £14.1bn in the previous year.

In my opinion, SDLT has become a tax on mobility, which has ramifications for everyone with ambitions to own or move for career purposes. As well, older property owners are put off moving to smaller residences, which could release “frozen” capital into the economy and housing stock back into the system. SDLT is now the biggest brake on social mobility right across the spectrum. Currently, even with its allowances for first-time buyers, SDLT is, and will continue to be, a disincentive to purchase or move, affecting every social and economic group. Surely it is time to think laterally. With all of this activity in the market, it is worth remembering that a healthy housing market improves consumer confidence and leads to higher spending. I have no doubt the Treasury can predict the numbers more precisely, but isn’t it more equitable to collect VAT receipts from goods people want to buy than to collect a tax that house buyers always resent? It was particularly noticeable that during the stamp duty amnesty, one of the few success stories to come out of lockdown, apart from home food delivery, was the increase in spending on DIY and home improvement. Whatever the government’s motivation for thinking about abolishing SDLT, there is no doubt it would be a popular move. M I

NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:30:51 am

REVIEW

GENERAL INSURANCE

Bridging the advice gap: the importance of customer-centricity Emma Green distribution director, Paymentshield

t the beginning of the month, the Money and Pension Service launched its annual Talk Money Week, centred on the theme of “Do One Thing.” Campaigns like these resonate deeply with us at Paymentshield, as we believe that particularly in today’s challenging economic climate, open and candid discussions about finances are more important than ever. With inflationary pressures exacerbating the ongoing cost-ofliving crisis, informative conversations between advisers and their clients have never been more important in creating and defining that allimportant, lasting relationship. It’s clear that in times of economic uncertainty, the demand for financial advice grows. According to an online YouGov survey we conducted earlier this year with 2,139 UK adults, over half said they will be scrutinising financial products with a view to saving money. And yet, 56 per cent of respondents had never reviewed their finances with a professional. Further, we know from our adviser survey, conducted over July and August with 526 advisers, that advisers continue to be stretched in terms of the level of service they’re able to provide to their clients, due in large part to the regulatory demands of the consumer duty and ongoing economic turbulence. We also found that while 92 per cent of advisers recognise that it is best practice to speak to their clients about general insurance (GI), almost three in five say they sometimes miss

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opportunities to sell GI. It’s clear that advisers are increasingly struggling to find the time to deliver quality advice to their client base. Evidently, there remains a clear gap between the level of support that consumers would like – and that advisers strive to provide – and the level that they are currently able to offer. If our sector is to harness the ideals of Talk Money Week and encourage people to be open about their finances, then efforts to bridge this gap must continue. At Paymentshield, we recognise this is a vital issue that needs due attention. It’s why we launched our referral option in August. Equipping advisers with this tool, which enables them to refer their clients to our team of in-house experts, offering calls at the clients’ preferred time, provides advisers with the additional capacity and resources necessary to deliver a service that is truly customer-centric. Advisers aren’t in the dark over how their referrals are progressing, either. We’ve built technology into our Adviser Hub that enables advisers to check in on how they’re developing, providing a holistic view of all their GI business in one place. These enhancements to our offering not only underline our dedication to innovative technology, but also guarantee high-quality results for advisers and their customers. For example, since the launch of the referral option, we’ve seen average sale conversion rates hit as high as 65 per cent when we’ve called the customer and discussed their GI needs. The significance of referrals becomes even more pronounced in choppy waters like these. We’d urge all advisers to use referrals within their sales strategy, to further enhance the GI protection of their clients. Advisers play a pivotal role in initiating these

NOVEMBER 2023

conversations and ensuring their clients make informed and secure financial decisions. But if we in the insurance industry are to continue supporting advisers and helping them to provide a quality, holistic service, it’s crucial that we continue to provide a broader suite of tools to deliver this. For example, alongside our referral option, advisers in our partner network have also indicated the importance of a marketing toolkit. Giving them resources to help them successfully navigate the GI sales process means we are better able to help them speak to clients about their GI needs and any other financial concerns they may have. Ultimately, it’s important that we not let the meaning of this week pass us by. Constant progress and swift reactions to market developments are vital in our industry, and it’s imperative that advisers tap into the resources that we’ve worked hard to provide to deliver the gold-standard service that customers expect. M I

CMY

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15/11/2023 6:31:23 am

CMY

Say

hello. TO OUR NEW QUOTE JOURNEY

Our new referral service is designed to help you offer quality insurance to each and every client. We’re able to offer your clients advice on your behalf over the phone or you can give your clients the option of getting their own quote from us online. However you choose to refer business, you can track your client’s journey from start to ﬁnish in our unique Adviser Hub.

Watch our video to ﬁnd out more: paymentshield.co.uk/referral For intermediary use only. Paymentshield and the Shield logo are registered trademarks of Paymentshield Limited. Authorised and regulated by the Financial Conduct Authority. © Paymentshield Limited 10/23 00187.

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NOVEMBER 2023

MORTGAGE INTRODUCER

15/11/2023 6:31:28 am

COVER

INDUSTRY ICON

The broker’s voice The Association of Mortgage Intermediaries fights the corner of brokers with everyone from politicians to regulators. Its chief executive – and industry icon - Robert Sinclair tells Simon Meadows why it’s his perfect job

“I

f I go back to when I started there was quite a lot of ‘them and us,’ lenders versus brokers,” says Robert Sinclair, chief executive of the Association of Mortgage Intermediaries (AMI), reflecting on his tenure at the organisation. “So, it was very conflicting. There was a lot of anger between the two sides. And I’ve worked very hard over the last 15 years to make it a partnership.” Sinclair continues, “Much of lenders’ business comes from intermediaries. You cannot look at this as a confrontation, ever. If you do that it will begin to atomise and you’ll end up in a bad place where we’re back in the bad old days again. It will not work, it will not be effective, and so working together in partnership on a range of issues is really important. Understanding another person’s perspective is so critical – the risks are on both sides. “I know I’ve managed to change that quite a lot over the last few years, to be much more people working together. Evidence of that is that whenever I get into difficulty, there’s a lot of lenders who will jump to my defence, as much as brokers will.” Part peacemaker, part advocate, part lobbyist and negotiator, Sinclair is at the helm of the representative body for the mortgage and protection advice profession. Over 80 per cent of all brokers belong to AMI – it is effectively their voice in discussions with policymakers, politicians, and regulators, with its prime focus on delivering a better business environment for its members. “My job is to represent the commercial interests of member firms to government and regulators,” elaborates Sinclair. “That involves lobbying, reading, understanding all the things that may be coming through legislation or regulation that could have an impact on the mortgage broker community, and managing a team of people, all to make sure that we’ve got the right level of expertise and knowledge and can to react in an appropriate way to whatever it is we think is coming at us. “Some of it is educational – in terms of how AI may affect the sector, for example, or what the green agenda might become – and what we can do, prac-

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tically, to make the diversity and inclusivity agenda better. How can we persuade more people to sell protection? There’s still a huge gap there between what we think the need is and what’s actually delivered. “Then there’s the pure stuff around regulatory change, which is either things like consumer duty or the appointed representative regime, or just what’s happening in the world of lifetime mortgages or second-charge mortgages at the moment, where we’ve got a supervisory intervention in the sector.” He adds, “It’s a broad kind of role in terms of thinking through what’s coming and thinking through how that might have an impact on firms and advisers, and trying to make sure that when it does arrive it does as little damage to people’s ability to trade as possible.”

“You want to be close to people writing the policy or doing the work so that you can influence their thinking. We’re constructively critical.... if we think they’re wrong, we’ll say it very plainly” ROBERT SINCLAIR, AMI CONCEPTION AMI was conceived with the development of mortgage regulation around 2003. It was initially part of the Association of Independent Financial Advisers, which no longer exists. Sinclair came on board in 2008. “Back then we were in the middle of that northern hemisphere financial crisis, and we were trying to work out what would survive, who would survive – whether the country would survive in terms of an economy, effectively,” he recalls. “We were going through fundamental rewrites of mortgage regulation and renegotiating the financial services compensation scheme a couple of times. Therefore, the need to have AMI in the room to try to make sure that this wasn’t just dictated by the lenders was really critical. “We’ve not had those types of what I would call www.mortgageintroducer.com

15/11/2023 6:33:22 am

COVER

INDUSTRY ICON

Robert Sinclair

political fights since back then, but there is still the need for AMI, because of the nature of the market and also with the ingress of technology and green concerns. The need for brokers to think about how they reposition themselves and remain relevant is probably as big as it was then.” Sinclair believes the fact that he didn’t have a broker background may have enabled him to come to the organisation with few preconceptions. “I’d been a lending manager, I’d done lending, and I understood all the principles,” he says. “The advice bit was woven into my DNA in terms of jobs I’d done and the management of all of that.” In 2012, AMI decided to go it alone – Sinclair and his board walked away from the financial advisers’ the association with the AMI brand name and a list of members. “I left a pound on the table as a consideration which some people thought was too much and other people thought that not enough at all for what we’re walking away with,” he shares. “We started from scratch in an office in Milton Keynes, with just two brains and nothing else. That grew to what it is now, which is effectively five of us employed full-time. “There was a spell when we first started when, www.mortgageintroducer.com

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because risk functions were not very well developed, we produced lots of fact sheets and help sheets and were very much the compliance support for the mortgage sector, and that changed over time as networks grew and built their own compliance and risk functions.” INFLUENCE Sinclair considers AMI’s role today, thoughtfully. “You want to be close to people writing the policy or doing the work so that you can influence their thinking,” he offers. “We’re constructively critical, and that means if we think they’re wrong, we’ll say it very plainly. It’s that judgement call of trying to really understand the emotion of the membership, but also trying to understand how you can influence regulators.” How does he judge the success of what the organisation does? “I look at it in very simple terms: Have we got a voice that’s listened to?” says Sinclair. “Recently, the Labour Party asked to meet with us and a range of our members in order to try to get a better feel for what was going on and to educate them on issues within the sector and also let them share with us a bit about where they thought they might go from NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:33:29 am

COVER

INDUSTRY ICON

a housing and Treasury perspective.” Alongside his industry colleagues, Sinclair attended the meeting with leading shadow cabinet ministers Rachel Reeves and Lisa Nandy. “They were keen to turn up, and listen, and share as much as they could within the confines of not wanting to give too much away, given that they’re a long way away from being able to or wanting to put forward an election manifesto,” he reasons. “It was their desire to listen, as opposed to – and I am going to say this – the current incumbents, who have a real desire to tell and not listen, and that difference is huge. “I’ve always been interested in politics. I’ve never been a member of a party, and probably never will be, but that doesn’t mean I haven’t got a very strong opinion about certain things.” Sinclair confides, “I watched Boris Johnson butcher the UK constitution on a series of occasions in parliament, as prime minister … butcher it. On one occasion, I cried. As a university student I did constitutional law and administrative law as part of my degree, and understanding the delicacy of a UK constitution, which is predominantly framed around the way the laws are interpreted by courts as much as anything else, to watch him just drive a coach and horses through all of that and to … well, he knew that he could get away with it, that’s the issue. “If you worry about democracy in the UK, I think that’s frightening. As a youngster, you’re quite radical. I found myself as I grew up having to think about falling in love, having a family and having to conform to a degree to earn enough money to be in the right place. I’ve now reached a stage in my life where I don’t have to worry about those things in

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the same way. I think I’m more radical again than I have been for a very long time. I look at the politics of the UK and certain parts of Europe and I worry about what I see.” In those moments when the chief executive of AMI has the ear of a possible future chancellor of the exchequer, he might reasonably feel he’s come a long way in life. “I grew up in one of the roughest parts of Edinburgh,” shares Sinclair. “So, if you think of [the film] Trainspotting, that’s where I grew up. My mum worked on the production line in an electronics factory, my dad was, at the time I was born, a greeting-card salesman. I was lucky enough, although I lived in the middle of quite a difficult area, that my parents had enough money to send me to private school. “I grew up in a world of investing in equities, not in property. My dad taught me all about shares, funnily enough. When my grandmother died, I was only nine. He took my part of the legacy and invested in a small portfolio of stocks and shares, which I looked at all through my teens. We’d go through what shares we had and what the dividends were. I’ve been involved in all of that since then.” AMBITION The ambition that shaped Sinclair’s career arguably came from his parents. His mother was the first woman on the Sports Council in the UK, and she was one of the team managers for the Commonwealth Games in Scotland in 1970. “My dad was probably one of the best athletics coaches in Scotland all of his life,” he remembers. “So [he had] all of that drive, in terms of thinking through that you can be ordinary, or you can try to be better, be the best person you can be.” Sinclair excelled at athletics at school, particularly as a pole vaulter, and competed at a senior level, representing his country. “I walked away from it – I’m much more a team player than I am an individualist,” he notes. “Most successful businesses are about how you build great teams.” He attended university in Edinburgh, studying business organisation and business law, before beginning his career with Midland Bank. He later moved to Santander. “My growing up was very much banking in all its types,” he explains. “I’ve been a corporate banking manager, I’ve been a private banking manager, done internal audits, done marketing. I’ve done lots of weird things in my career.” AMI has provided Sinclair with what seems to be his perfect role. “I became a round peg in a round hole after about 12 months in this job,” he muses. “I could never have believed I would end up in a place that allowed me www.mortgageintroducer.com

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COVER

INDUSTRY ICON

to use the skills that that I most enjoy, which is the ability to read stuff, actually analyse it, think about it, present it, argue with people about it, debate it, think it through, argue it again. “The thing I struggled most with in large corporates was the whole bureaucracy of the people. We have none of that in AMI. We recruit the right people – none of them has had a written performance review in the time that we’ve worked together, because what’s the need? If you actually work well together and know each other well enough, you don’t need that sort of process.” He adds, “I’ve always taken the view that I’d rather be underpaid and overvalued, than overpaid and undervalued – that’s the way my father brought me up, which was to always overdeliver.” CHALLENGES Sinclair turns his attention to the current market. “Having been in an unusual market for the last 12 years, really, where interest rates have been unusually low,” he observes, “we’re back now in a much more normal interest rate environment, which people are going to have to get used to. I think where we are now is probably going to be it for the foreseeable future. “The mainstream market is probably, in income terms, about 20 per cent down. But if you can realign your cost base a little bit, then it’s not quite so bad. So it’s not an easy market, but it’s not a disaster either. “Remortgaging is still tricky for some people just in terms of affordability. It’s interesting to see some lenders beginning to align the transfer procuration fees with mortgage and new business procuration fees. There’s a lot of debate going on in the market as to whether that’s the right thing or the wrong thing to do.” He asserts, “Everybody’s going to batten down the hatches, get through the winter, and then we’ll see whether consumer sentiment shifts at Easter as the weather begins to get better. I think that will be the bellwether point. But there’s a lot of uncertainty around, whether internationally geopolitical or domestically with our own politics.” Sinclair considers how the adviser role is changing, and acknowledges, “It’s now a much harder conversation with customers around ‘If you want to keep this house or you want to buy that house, you’ve got to think about changing your spending habits.’ “If I go back to when I was buying my first house, you were buying it on the basis that you wouldn’t have a holiday for the next two years, you wouldn’t change the car. People have got a very different level of expectation as to their lifestyle [now], and I think we’re going to get into much deeper trade-offs. If you want that house, you’ve got to give something up to get it, which is not where we’ve been for a very long time.” www.mortgageintroducer.com

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“We’re still going to need lots of interesting funding arrangements in order to allow people to buy houses to make homes in.… Technology is not going to change that in the next 10 years” ROBERT SINCLAIR, AMI In his mid-sixties, Sinclair is contemplating what to do next. “There comes a point where, much as I love the industry and my job, I owe it to myself to separate that and invest more time in me rather than the job,” he says. “I see too many people retire and die quite quickly, and that’s not what I want to do. I see too many people stay too long as well. “You become closed and blinkered and therefore, you should give other people the chance to take something and grow it in their direction. I think we’ll have to be much more on the front foot in relation to how AI is going to affect the marketplace. I think we’re going to have to get quite expert on some of the technological changes.” BUSY Should Sinclair decide to step away from AMI, it’s doubtful that his life will be markedly less busy. “I’m already a non-exec director of the Darlington Building Society,” he points out. “I’ve always wanted to invest some time back into the charity sector. I’ve always loved rugby – I’d love to do a full Lions tour, six weeks away just following the team around, and I might actually find some time to spend with my seven grandchildren.” Encouragingly, Robert Sinclair remains hopeful about the market he serves. “I am always genuinely optimistic about the sector,” he declares. “We’re still going to need lots of interesting funding arrangements in order to allow people to buy houses to make homes in. “Technology is not going to change that in the next 10 years, in terms of the need for mortgage brokers, intermediary stuff, and really good conversations with people about the best way to design their finances. The challenge, I think, is how we get better at advising people rather than just picking a mortgage.” As the conversation draws to a close, Sinclair concludes, “I would not have carried on doing this job as long as I have if I didn’t genuinely enjoy representing the people I represent. Broadly speaking, the people I get to work with are genuinely, both in the lender and on the intermediary side, really great people, trying to do good stuff every day.” M I NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:33:46 am

INTERVIEW

ENERGY EFFICIENCY

ENERGY EFFICIENCY GAINS Supporting customers to better understand energy-efficiency home improvements is a core aim of NatWest in its commitment to this rapidly evolving market, as its head of mortgage proposition, Lloyd Cochrane, tells Mortgage Introducer

“H

omes in the UK are amongst the leakiest* in Europe,” says Lloyd Cochrane, head of mortgage proposition at NatWest. “They’re also amongst the oldest, in terms of the housing stock, so there isn’t a one-size-fits-all solution for customers to make their homes more energy-efficient. In our own research we’ve helped nine different families retrofit their homes, to make their properties more energyefficient. We’ve seen through that practical experience that it’s really hard for a consumer to understand where to start.” With 17 million retail customers and a significant market share of business banking, NatWest is one of the biggest banks in the UK, so it has an important role to play within the green mortgages market, where it offers specially tailored products for purchasing or remortgaging a home with a valid Energy Performance Certificate (EPC) rating of A or B. Key to its approach is helping its customers with the often-overwhelming task of making energy-saving and cost-saving improvements to their homes. Cochrane, who is responsible for the bank’s climate strategy for housing, explains that it aims to support its customers to better understand what’s involved in retrofitting their properties. Its educational role involves arming them with really useful, practical information and, where possible, providing them with the lending they need to make those often-costly improvements, should they wish to do so. To achieve this goal, NatWest is developing a range of innovative initiatives. “We already have our online tool, the Home Energy Plan, where a customer puts in their postcode and a few details about their property,” Cochrane says. “They’ll get data about the energy efficiency of their home, to guide them in the improvements they could make. These may range from relatively simple things, like energy-efficient light bulbs, through to insulation in a loft, and bigger things that are more expensive,

MORTGAGE INTRODUCER NOVEMBER 2023

such as double glazing. When it comes to those, that’s where we could really help to spread out the cost of those home improvements.” NatWest is developing its strategy with the launch of the NatWest Home Energy Hub, which it describes as a one-stop-shop proposition – a tool that supports homeowners through every stage of their quest for a more energy-efficient property. “It’s a digital plan that builds a journey, from expanding customer awareness through to partnering with installers,” Cochrane elaborates. The bank will partner with a business that can offer a physical assessment of a home at a preferential rate, and suggest improvements that are relevant for a particular home. Smaller changes, he says, can be achieved through the lender’s link-up with a DIY chain, allowing customers to get things like energy-efficient lightbulbs.

“Having children has definitely made me think more about the longer-term responsibility I have, because they are going to be around longer than I am” LLOYD COCHRANE, NATWEST “For more expensive works, we’re partnering with a different organisation so that customers can arrange the installation of things like solar panels and heat pumps,” Cochrane clarifies. “There are local and national grants that can potentially help to meet the cost of these works, but it is quite complex to understand what particular support is available, based on where you live, what your level of income is, and other criteria. So we’re putting all of that in one place for our customers, too.” Cochrane notes an increasing awareness of the impacts of climate change. www.mortgageintroducer.com

INTERVIEW

ENERGY EFFICIENCY

“We run our quarterly Greener Homes Attitude Tracker, surveying 4,500 UK individuals, to understand how homebuyers, renters, and owners feel about greener homes and the importance of energy-efficiency features,” he details. “Certainly, in the last two years we’ve seen more and more customers wanting to make energy-efficient home improvements. The percentage of customers reckoning they will do so within the next 10 years has risen by around 10 per cent over the last two years, to 66 per cent. This is also up from Q1. The number who think they will take action in the next twelve months has gone up from about 15 percent to 22 per cent in the same period.” Among the tracker’s latest findings: Forty per cent of prospective homebuyers looking to purchase a property in the next ten years stated that a property’s EPC rating was a very important factor. Homeowners estimate that it would take an average of 15 years for the savings in regular energy bills to offset the estimated installation cost of £34,000 to retrofit a typical UK home. Sixty-one per cent of households reported trying to minimise home energy use in Q2, down from a peak of 64 per cent in Q4 2022. An electric car-charging point remained the feature most likely to be installed over the next ten years (40 per cent), ahead of solar panels (38 per cent) and tripleglazing (35 per cent). For solar panels, this was up from 32 per cent a year earlier. “An important area for NatWest is to support existing customers making improvements to their homes,” Cochrane outlined. “If, as a country, we are going to hit emissions targets to reduce carbon, we need to replace gas in our system, so most people are going to need to replace a boiler at some point, perhaps with a heat pump. That transition from gas to electric is a huge challenge, but also a huge opportunity for manufacturers, it’s a huge opportunity for installers – but we need a lot of skills-building and capacity-building in the supply chain to turn that into a reality. “Through our commercial business, we are working with a supply-chain school to help it to build training for people who want to train as heating engineers – there aren’t enough people with those skills. This transition offers significant growth for the economy, so unlocking it is really important.” NatWest believes that it can also support brokers in getting up to speed with the complexities of energyefficiency home improvements and related lending. “We’ve got a role to play, as have other lenders, in giving brokers the information that they need to help their customers understand this area,” says Cochrane. “I think intermediaries and all of us are getting more clued up. I’d say two years ago, even one year ago, www.mortgageintroducer.com

Lloyd Cochrane

I knew far less about this than I know today. There weren’t the tools out there to help me understand, but we’re changing that. “NatWest’s relationship with the intermediary market is hugely important – the majority of new customers come from brokers, so they are a key partner and an important part of the ecosystem. They can access our Greener Homes Attitude Tracker to understand how the market’s evolving, and there are a number of intermediary groups that are dedicated to advancing their knowledge.” Clearly highly engaged with this subject, Cochrane reflects on the four teenage children he has at home, amusingly relating how he is always telling them to switch off the lights. “Whilst being slightly hypocritical about the lights they leave on, they’re very aware of climate change, and far more interested than I would have been at their age,” he shares. “They’re active in encouraging me to think in different ways. Speaking personally, having children has definitely made me think more about the longer-term responsibility I have, because they are going to be around longer than I am.” M I

*Research by climate management company Tado sampled more than 80,000 European homes and found that houses in the UK lose heat significantly faster than those in European countries. (October 2022) NOVEMBER 2023 MORTGAGE INTRODUCER

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MORTGAGE

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INTRODUCER

5-Star

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CONTENTS Feature article .............................................................. 22 Methodology................................................................ 23 5-Star Lenders 2023 ................................................... 25

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NOVEMBER 2023

MORTGAGE INTRODUCER

15/11/2023 6:47:27 am

SPECIAL REPORT

5-STAR LENDERS 2023

BRITAIN’S LEADING LENDERS MORTGAGE INTRODUCER’s 5-Star Lenders of 2023 are delivering crucial service and support for their broker partners despite persistent market volatility. This year’s best mortgage lenders have earned the trust and confidence of the broking community, whose ratings across various metrics most vital to them catapulted the top performers onto the 5-Star podium. In a highly competitive mortgage landscape, the 5-Star Lenders are thriving while driving broker satisfaction by prioritising: • fair pricing for clients • streamlined processes

• reasonable turnaround times • comprehensive and responsive underwriting • exceptional customer service “Ultimately, we are looking for good outcomes for our clients in the quickest and simplest way possible,” says one of MI’s Top Brokers of 2022, Rebecca Shuttle, principal at MIMA Mortgage and Protection Advice. “Lenders who can provide all-around good service and products with clear and concise lending policies mean we are better positioned with the tools we need to support our clients.”

WHAT IS MOST IMPORTANT TO BROKERS WHEN CHOOSING A LENDER? 1 = least important; 5 = most important

Interest rates

4.29

Turnaround time

4.24 4.08

Customer service

3.08

Technology

MORTGAGE INTRODUCER

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Stephen Hogg, West One

2.75

Loan programs

Marketing

“If we’re consistent, responsive, and deliver great customer service, the people we know will keep coming back to us, and, hopefully, those who try us for the first time will have a great experience and keep coming back”

2.12

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The Society of Mortgage Professionals’ vice chair and CEO of Connect for Intermediaries, Liz Syms, adds that brokers will typically start with the following when assessing a lender:

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• matching their client’s criteria and needs • comparing interest rates • speed of service and consistency “It is essential that 5-Star Lenders offer the whole package,” she says.

Reliability drives West One to the forefront Regarding speed and willingness to lend, brokers noted that West One has excelled on both counts, prompting them to give more business to the 5-Star Lender in the past 12 months. But it isn’t just agility and appetite that keep West One at the leading edge, as the mnemonic CREDIT underpinning its culture demonstrates: • customer-first approach • results-oriented • energy • development • invention • teamwork “We’re not a bank or a scorecard-driven lender; we’re all about listening to what the borrowers want our money for, and we have an inventive approach to solving problems,” says COO Stephen Hogg. “We keep lending, and we’ve been running the business through the pandemic, Brexit, and all sorts of dislocations in the market,” he continues. “Relative to our peers in the non-bank lending space, we’re large, profitable, and stable. It isn’t clever or sexy; it’s repeatable, reliable, and trustworthy. If we say we’ll lend money on a certain day and time, we’ll do that.” The specialist lender in the property mortgage space has grown exponentially over the last decade, attracting several institutional shareholders. The company now boasts its most prominent sponsor, Elliott Advisors, one of the world’s largest money managers. While West One isn’t a small shop any longer, it has continued to strengthen its competitive edge by maintaining a

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METHODOLOGY To uncover the best lenders in the eyes of the UK’s broker community, Mortgage Introducer reached out to brokers across the country, asking them to rate the lenders they work with across three key areas: tracker mortgages, fixed-rate mortgages and standard variable rates. Mortgage Introducer also asked brokers to weigh in on important aspects of the broker-lender relationship, such as interest rates, turnaround times, customer service, technology, loan programs and marketing. Lenders that earned an average score of 4 or higher were recognised in the second annual 5-Star Lenders.

42%

26%

19%

of brokers said turnaround times had improved significantly

of brokers said lenders could improve service levels through better communication

of brokers said lenders could improve service levels by having more BDMs or credit assessors, a simpler income verification process and better technology (a three-way tie)

INSIGHTS As part of our editorial process, Key Media’s researchers interviewed the subject matter experts below for their independent analysis of this report and its findings. Liz Syms Vice Chair, Society of Mortgage Professionals Chief Executive Officer, Connect for Intermediaries

Rebecca Shuttle Principal MIMA Mortgage and Protection Advice

small-business mentality and prioritising its nimbleness, speed, and efficiency. That can best be seen in its approach to the following, emphasised by Hogg: • Customer service: “We look at it two ways: there are the basics, like answering the phone and responding to emails promptly. But this is entirely a relationship business; people buy people. And we are adamant that our people serve our broker community well.” • Tailor-made solutions: “We’re here to fill a role in the industry, listening to people, working out what they need and finding inventive and creative

solutions to fit that.” • Pricing: “We try to price fairly; we don’t lend money at a loss, and we’ve had very few losses historically. We price for risk, a fair return, and the service and speed we can deliver. We’re not trying to be a massive corporate bank smashing out thousands of homogenous widgets.” Valuing and nurturing its broker partnerships keeps West One at the forefront of its niche lending space. Building those longstanding relationships is a thread that runs through all of its business strategies, from marketing and campaigns to client service and everything in between.

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SPECIAL REPORT

5-STAR LENDERS 2023

HAVE TURNAROUND TIMES IMPROVED OR WORSENED OVER THE LAST YEAR?

Improved significantly

19%

5-Star Lenders navigate challenges with a client-centric approach Pricing volatility has been an ongoing challenge for the industry, and the best mortgage lenders have acted quickly to reprice and communicate proactively with their broker partners. They have also leveraged technology to streamline the lending process and improve turnaround times, with the following improvements mentioned by broker respondents:

Worsened

39% Improved

24% No difference

18%

“Our plans are to continue offering that personal contact and manual underwriting that have earned us this strong reputation so far” Kelly Pallister, Foundation Home Loans “We’ve been working with brokers consistently for many years, and they keep coming back,” says Hogg. “We’ve also pushed to bring in new communities of brokers as we broadened our product range and got into new areas.” The best mortgage lender in the UK plans to continue building out its product range, possibly including semi-commercial and commercial mortgages. At the same time, the recipe that fueled its success will inform

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its forward-looking ambitions. Its commitment to fostering a positive work environment and investing in the development of its people stands it in good stead to continue setting new standards of industry excellence. “We will keep going and be a reliable lender the whole way through,” Hogg says. “We’ll continue to be a one-stop-shop for people’s difficult, interesting, slightly quirky, off-the-high street financing needs.”

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• AI-powered verification • open banking • digitising document submissions • desktop valuation systems In commenting on brokers’ top reason for choosing lenders – interest rates – the Society of Mortgage Professionals’ Syms says, “Brokers want to be able to secure the most competitive options for their customers without compromising on service.” Former Top Broker Shuttle agrees. She says, “Lenders should offer fair pricing that reflects market conditions, is cost-effective for the client, and is inclusive of arrangement fees.” Several broker respondents didn’t pull any punches on the issue: • “It’s all led by interest rates and what’s most cost-effective for the client. Then we look at criteria, so it depends on who is offering what.” • “I’m fiercely independent, and each case is individually placed.” • “We only support lenders that meet our clients’ requirements based on criteria and interest rates.” “A lender deemed 5-Star adds a competitive element, but they need to back this up through consistency and, ultimately, in this market, competitive pricing, which has the client’s best interests at the centre,” Shuttle says.

Broker partnerships spur Foundation Home Loans to new heights The intermediary-only specialist lender and mortgage servicer has built its reputation

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on a passionate commitment to great broker experience, which drives its culture. The 5-Star Lender’s agility and ability to adapt quickly have enabled it to excel in its niche of manually underwritten residential and buy-to-let mortgage criteria for borrowers with more complex needs. Two years ago, the organisation identified the main drivers of the Net Promoter Scores that brokers gave them after doing business, identifying the areas noted as most important and where the lender believed there was room for improvement: • speeding up the processing of mortgage offers • increasing the desire for more direct underwriter contact after case submission

“Taking a risk-based approach, we overhauled our process, removing the automatic need for bank statements, for example, and creating the TCM team, who are there specifically to liaise with the broker to get the documents required to get the case to offer,” says Kelly Pallister, managing director of operations. The simplification of its underwriting process and significant investments in some new systems kept Foundation Home Loans’ turnaround times extremely sharp through 2023, freeing up staff from manual tasks to spend more time talking to brokers and offering more automated case updates to eliminate call wait times. “The other important thing to remember about specialist lenders is that it’s the breadth of criteria on offer, which is the most relevant

offering, combined with the ability to manually underwrite against a real understanding of the borrowers’ situation,” says George Gee, managing director of commercial. Foundation Home Loans’ experienced staff is also at the cutting edge due to initiatives such as: • broadening its lending criteria, especially in the owner-occupier segment, to meet the ever-evolving needs of borrowers who don’t meet mainstream criteria • combining the widened lending criteria with its culture of personal engagement with mortgage brokers to expand the range of mortgage customers whom intermediaries can assist in their business

5-STAR LENDERS 2023 Barclays Coventry Foundation Home Loans Phone: 0344 770 8032 Email: enquiries@foundationhomeloans.co.uk Website: foundationforintermediaries.co.uk

Halifax HSBC more2life NatWest Nationwide Building Society

West One Phone: 0333 123 4556 Email: hello@westoneloans.co.uk Website: westoneloans.co.uk

Skipton Together United Trust Bank Virgin Money

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ROUNDTABLE

GREEN MORTGAGES

Increasingly energy efficient As householders gradually wake up to the threat of global warming, the mortgage industry has a big role to play in educating them about the benefits of more sustainable homes. Mortgage Introducer’s roundtable delved into this complex issue

ith the environmental challenges facing our planet coming under evercloser scrutiny, so too does the green mortgages market. Every extreme outbreak of wildfires or flooding – indeed, any burst of unseasonal weather – seems to heighten like never before public consciousness about the huge battle facing politicians, policymakers, and the public the world over in our collective efforts to combat global warming. Slowly but surely, it seems, the world’s population is waking up to the enormity of the task. Yes, there are climate deniers, certainly, trying to drown out the warnings, but the mortgage sector is among those industries addressing environmental issues with an increasing, though not quite yet universal, commitment to offering financial products that recognise the need for sustainable homes. Those lenders who are on the front foot are offering ever-more attractive green mortgage products that reward higher-rated Energy Performance Certificates (EPCs) to incentivise householders to improve their homes and reduce their environmental impact on the planet. But the relatively high cost of installing solar panels or energy-saving heat pumps, for example, means that bringing on board most homeowners is an unenviable task – especially during a cost-of-living crisis. It’s a challenge, though, for which growing numbers of lenders, and advisers within the broker community, are signing up. All of this makes for a fascinating debate, with so many different perspectives to consider, and so many different voices to be heard from all sides of the discussion. To gain a greater insight into how the industry is facing the issue, Mortgage Introducer, in association with NatWest, brought together five leading experts in the sector. They were: Lloyd Cochrane, head of mortgage proposition at NatWest; Chloe Timperley, senior policy

adviser at the Association of Mortgage Intermediaries (AMI); Karina Gerdes, head of ESG at Mortgage Advice Bureau (MAB); Rachel Hunnisett, the green mortgage campaign lead for Green Financial Institute (GFI); and Richard Merrett, director of strategic relationships, SimplyBiz Mortgages. The panel started by giving a brief outline of the businesses and organisations they represent. Cochrane began, saying of NatWest, “From a housing market perspective, we’re one of the biggest lenders to house builders, the biggest lender to housing associations, and the biggest lender to businesses up and down the country.” Next, Timperley defined AMI. “We are the trade organisation for the mortgage advice profession,” she said, “so we represent the interests of broker firms in front of regulators and government as well.” Gerdes explained that MAB was a network of over 2,000 independent advisers. “We offer expert advice around anything mortgage- or protection-related across the whole of the UK,” she added. Representing GFI, Hunnisett said that it encouraged the finance sector to channel more capital toward net zero. “We work on a programmatic level across multiple sectors,” she said, “including transport, nature, the built environment.” Merrett said of SimplyBiz Mortgages, “We’re the thirdlargest mortgage club in the country and look after directly authorised firms and providing access to market and compliance support.” MARKET The panellists then turned to the subject at hand: considering the current green mortgages market and its challenges. “There is a huge amount of enthusiasm for the green mortgage market across the sector,” said Hunnisett, who pointed to lenders’ focus on their central ESG strategy, with a reduction in emissions across their back book, as a key aim. Distributors were focused on delivering net zero, she said, and brokers, too, were considering

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ROUNDTABLE

GREEN MORTGAGES how they could specialise in this area to make a positive impact on the environment through their work. “As with any emerging market, there are obstacles to navigate, and scaling the green mortgage market is no exception to this,” Hunnisett added, referring to “the Herculean task of decarbonising housing stock.” But these also presented opportunities, she said. Merrett offered, “We’ve reached a point where it’s on the agenda for most distributors’ events. There is a vast uplift in the number of products that feature some sort of green facility, whether that be a reduction of rate, or cashback to help people retrofit.” The government had moved the goalposts in terms of the legislative requirements, he noted, with differing views on whether this was positive or negative. While some initiatives entailed costs, in a cost-of-living crisis people could focus on the small behavioural changes to their homes that actually saved them money. Providing the right tools and education to advisers could help them to support customers in doing this, he said. Cochrane gave his perspective. “Most of the market, NatWest included at the moment, use green mortgages to incentivise customers who’ve got A or B rated homes,” he said, while acknowledging that millions more UK homes needed to be more energy-efficient. “The lender’s role here we see as twofold – to provide the funding to allow that to be more affordable, and to spread out the cost of making that investment in home improvement over time. But it’s also helping to make customers more aware of how they can make their homes more energy-efficient.” Cochrane added, “It’s a complex area, and most of us are motivated by making our homes cheaper to keep warm rather than by the prospect of reducing the carbon emissions from our homes. I think most folk would say, ‘Get my bills down first, make my home warmer and cheaper to heat – and if it’s greener as a result, that’s an excellent outcome also.’” Gerdes ventured that there was perhaps still an underappreciation of the significance of climate change and what that ultimately would mean to the next generation. “Education needs to be ramped up not just on the consumer base but equally amongst the adviser community,” she said, “and also to provide better solutions.” Customers might shy away from retrofit measures, Gerdes warned, given the huge cost and the fact that the alterations to their properties could be significant, along with reports of some improvements being unsuccessful. “There are things in the supply chain that need to be done to assure the consumer the improvements they are trying to make will really reap the

“It’s a complex area, and most of us are motivated by making our homes cheaper to keep warm rather than by the prospect of reducing the carbon emissions from our homes” LLOYD COCHRANE, NATWEST benefits that they are hoping to get,” she commented. On behalf of AMI, Timperley identified a “chicken-andegg problem” in the market. “Brokers aren’t wanting to start conversations unless they know that there’s going to be a product resolution that they can potentially recommend,” she observed. “But lenders probably don’t want to invest significant capital in broadening their green product suites until they see demonstrable evidence that there is that consumer demand.” She continued, “So what we’re really trying to do is break down that barrier. We want to also introduce the idea of brokers talking to their clients about this stuff, just to help them, not necessarily to lead directly to a product solution from day one.” AWARE How aware of the green market did the panel think borrowers were? “Broadly, consumers are aware of net zero and the need to reduce everyone’s carbon footprint, but I think there’s generally a lot of confusion and anxiety as to how the individual can really take action,” Timperley said. “There’s maybe a feeling that this is something that big corporations have to sort out, and it can feel very disempowering to a consumer.” Giving consumers better tools to find out what steps they can take would break down a lot of that anxiety, she suggested, adding, “We’ve seen with the spray foam insulation debacle that rushing headlong into certain energy-efficiency solutions can leave people with issues with their mortgages.” The market needed a more structured, accredited framework, she said. Cochrane explained that NatWest tracks customer attitudes about greener homes, asking around 5,000 consumers a month a series of questions – among them, how prepared they are to make energy-efficiency improvements to their properties over a one-, five-, and 10-year period. “Over the last two years, it’s gone from about 15 per cent of customers wanting to make a

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ROUNDTABLE

GREEN MORTGAGES

“As with any emerging market, there are obstacles to navigate, and scaling the green mortgage market is no exception to this” RACHEL HUNNISETT, GREEN FINANCIAL INSTITUTE change within a year to about 22 per cent of customers wanting to make a change within a year, and over that 10-year horizon it’s gone from about 55 per cent – so, just over half – to 66 per cent,” he told the discussion. “So you’re seeing an awareness rise, I think, from the data we have, and a commitment in principle to doing something.” While this suggested a change in customer attitudes, it didn’t necessarily translate into taking action to make a home more energy-efficient, he said. “It’s expensive to do that; it’s complex and confusing to navigate through the various choices,” Cochrane reflected. The housing stock in the UK is the least efficient in Europe, but also the most diverse, and there isn’t a one-size-fits-all approach, he added. SimplyBiz Mortgage’s Merrett said, “The greener homes attitude tracker is an excellent tool. It’s available on the NatWest website and it really is a good gauge of why it’s important for businesses and intermediaries and consumers to get behind this.” He continued, “I think if you ask the question of most people who own their homes and have done work, would you have liked to have done it energy-efficiently and cost-effectively, the answer would be yes. We’ve got to look at it across the piece – how we make it more accessible, how we educate more consumers on what they could do, and how to do so efficiently and effectively.” Merrett believed that if the industry could raise consumer awareness and, in turn, consumer demand, lenders, distributors, and intermediaries would be able to deliver the solutions. Hunnisett had a positive take. “There is an increased awareness of sustainability, and housing isn’t the exception here – we’ve seen this across multiple sectors,” she emphasised. “You only have to watch adverts on the TV now, in between your favourite shows, and you’ll see brands talking more about sustainability and ethics.” She pointed out that the ten hottest years on record had all occurred since 2010 – and with more heat drying out the ground, flash flooding potentially

followed. “As well as that major risk to life and threat to UK homes, it affects our infrastructure and just the way we live our lives as a whole as a society,” she said. “This really is our time in this industry to pull together and really support those net-zero ambitions, and there’s so much appetite to do that. I think we need to align with what our consumers are thinking in that regard as well.” Gerdes said MAB’s own research last year showed only one-third of advisers responded that their clients had actually heard of green mortgages. “These products are not very well understood, and that’s also because our advisers don’t necessarily feel they need to understand them very well because, unfortunately, the truth is a lot of the green mortgages out there at the moment are not competitively priced,” she told her fellow panellists. Gerdes added, more positively, that product diversity was improving, and more conversations were taking place between customers and advisers. FOCUS Next, the panel shared what their respective businesses and organisations were each doing to enhance consumer understanding of the green mortgage market. “I think for me the key area of focus at the moment is with advisers,” said Merrett. “Roughly 85 per cent of all remortgage business is intermediated. So where we’ve really focused is on the benefits of intermediaries getting behind this agenda. They’re quite vast – you’ve got the regulatory requirement, you’ve got the compliance considerations. If you don’t talk about it, have you done your job properly? There are some bigger-picture things – the value-added benefit. If you can’t save customers money on their rate at the moment, then can you focus on some cost-saving tips? Can you focus on raising their awareness of what they might be able to do to their homes cost-effectively to make them more energyefficient and to live more sustainably? There’s not a lot of opportunity to do that for mortgage rates at the moment, so let’s encourage them to look at other areas where they can have a positive impact.” Timperley talked about AMI’s work with the Mortgage Climate Action Group, which acts as a source of support for intermediaries, helping them to understand and address green issues – it has gained considerable traction in the last year. “We’ve now got brokers and lenders on board from many, many different firms, and we’ve launched a green mortgage advice website that will sit as the hub for resources and tools,” she outlined. In the area of adviser awareness, the group was focusing on

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ROUNDTABLE

GREEN MORTGAGES content creation, involving social media channels and podcasts, to highlight the need for brokers to engage with green mortgages – and highlighting, too, how to prepare for regulatory initiatives. In spite of the prime minister, Rishi Sunak, seeming to have pulled back from supporting green legislation, Timperley added, “The regulatory agenda is very much still on, and expectations are still high that financial regulators will deliver new rules that will support the delivery of net zero.” Gerdes shared that MAB had created its own green hub for consumers, collating information from various sources, providing hints and tips not just regarding finances but also about how to become more sustainable and energy-efficient in their own homes without spending a fortune – for example, not replacing products as quickly as people had become used to in a fast-moving consumer society. “If they’re already starting to see small benefits just from small behavioural adjustments, it’s easier to then jump to actually making an assessment of what more costly initiatives and changes to their home could mean to the bottom line as well,” she reasoned. “It’s not quite as abstract anymore as when you go into it cold.” Hunnisett said that GFI’s focus was working closely with stakeholders across the sector – particularly lenders. “What we want to promote is more customer choice, more options for consumers, which drives better outcomes,” she elaborated. “We’ve developed what we call greenprints – blueprints, essentially, of different types of products. When it comes to the broker side, in February this year, we released the brokers’ handbook on retrofit technologies and green finance, and that really looks to act as a guide to mortgage brokers as to how to start to have these conversations. It references the trigger points within the advice journey where you might want to start talking about retrofitting. I prefer to use the words home improvements for energy-efficiency – sometimes retrofitting makes me think of someone in flared jeans in a retro outfit!” Cochrane said that for NatWest, it was about helping customers – and helping brokers help customers – understand what they could do in terms of small and then larger measures. “So, practically speaking, if you’re a NatWest mortgage customer, when you go into the app and you check on your balance, where you go to make an overpayment or make a change, your energy performance certificate – the rating of how energy-

efficient your home is – is on your app alongside your balance and other details,” he said. “And from there, you can get what we call a digital home-energy plan. You put your post code in, answer a couple of questions. Based on publicly available data, you’ll get a personal digital report about things you can do to make your home more energy-efficient.” The lender would be launching a one-stop shop, Cochrane explained, working with different partners to provide discounts. “You might make mistakes that can be quite long-lasting if you install a heat pump in a house that isn’t well insulated,” he suggested. “So we’re working with a partner to provide our customers with a discounted home-energy assessment, and from there we’re going to be putting our customers in touch with partners who can actually do the work. That comes from a recognition from the research we’ve done that when customers want to try to do something here, they find it really hard and complex to navigate, from understanding through to being able to take action.” In addition, he said, it was about providing funding that allowed customers to spread the cost of those bigger home improvements over a longer period. OPPORTUNITY Finally, the panel looked to the future of the green mortgages market. “There’s significant opportunity here,” said Hunnisett. “Two hundred and fifty billion pounds need investing in UK homes in order to meet net zero in 2050, which is just 27 years away – which, when you think of the average term of a first-time buyer’s mortgage, you know, really is quite within reach. We need well-tested, cleverly designed, flexible mortgage products that suit the needs of the customers of tomorrow. And what the customers of tomorrow need are more thermally efficient, lowerrunning-cost homes that provide a healthier, more

“Roughly 85 per cent of all remortgage business is intermediated. So where we’ve really focused is on the benefits of intermediaries getting behind this agenda” RICHARD MERRETT, SIMPLYBIZ MORTGAGES

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ROUNDTABLE

GREEN MORTGAGES sustainable way of life.” She continued, “The disparity between energy-efficient versus non-energy-efficient properties will continue to grow, and I think that will be reflected in mortgage lenders’ affordability.” Cochrane envisaged an industry “getting better at using data to help customers make decisions, bringing more links between products and action so that we can expand awareness but also support that with different products. I think that those are the things where the complexities are today that can be simplified to make this much easier to understand and make it much easier for people to take action, and once that’s unlocked across an industry that needs to continue working together, the benefit to homeowners will be homes that are cheaper to keep warm.” He also identified the benefit of “the ability to unlock growth for the economy by improving homes and making them warmer – it’s one of the huge benefits of improving the housing stock in the UK.” Gerdes referenced the recent government rethink on its green strategy. “Obviously we’ve just seen the relaxing of rules around landlords, and it’s going to be interesting to see how that plays out across the UK. Should the government change its stance, and reintroduce the guidelines and legislative changes, we could potentially end up in a scenario where we are actually seeing properties flooding the market, which then will have an impact on values, and in that scenario, I’m relatively convinced that houses that are energyefficient will retain their value much better than other properties. We will then end up with properties being bought by people, potentially first-time buyers, who then have a property that’s sub-efficient because they’ve just taken it over from a landlord, for example, who didn’t want to make the required changes.” She concluded, “Not many people are actually lucky enough to work in an industry that can indirectly affect 20 per cent of the carbon emissions of the UK, and we are, so let’s use that lever and really drive change where we can

“Not many people are actually lucky enough to work in an industry that can indirectly aﬀect 20 per cent of the carbon emissions of the UK … let’s use that lever and really drive change” KARINA GERDES, MORTGAGE ADVICE BUREAU

“It may be that, ultimately, we don’t just have this mainstream mortgage market and remortgages, but that all mortgages, over time, become green” CHLOE TIMPERLEY, THE ASSOCIATION OF MORTGAGE INTERMEDIARIES

when the opportunity presents itself.” Timperley was, meanwhile, thinking about the political implications of the UK’s green strategy – with the general election ahead. “I think, because there is an election coming up, the government is trying to walk a very fine political line of, yes, the majority of the population does seem to be on board with net-zero policies, but that rolls back to about a fifth of the electorate when you ask whether those policies are going to affect people financially,” she said. “So there’s a real need to be seen to be thinking about the immediate-term costof-living crisis and all of the pressures that individuals and companies are under.” She suggested, “It may be that, ultimately, we don’t just have this mainstream mortgage market and remortgages, but that all mortgages, over time, become green.” Merrett was also focused on the government’s apparent movement on legislative policy. “For me, I think everything has changed, but nothing has changed,” he said. “It’s still a good thing to have a more energyefficient home. It’s still a good thing for a lender to have a more sustainable back book. There is still a commitment to getting to net zero. I think it sharpens the focus for the industry – we need to address this problem ourselves and do something about it ourselves from within, and that will require the continued collaboration that we’ve touched on. I’d really like to see some radical thinking around it beyond product. Could we see a place where lenders co-fund some of the climate tech that’s available to get that in front of consumers so that it makes it easier for them to find the right solution to make energyefficient improvements to their homes, to find the appropriate tradespeople? There’s a real opportunity to address this from a very, very different perspective from anything the industry has done before, and I think we can do so, together.” M I

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INTERVIEW

FAMILY BUSINESSES

We are family Blood is thicker than water, it’s said – but how far does that go when it comes to working together in the mortgage industry? Simon Meadows spoke to three industry families about their business relationships

amily businesses don’t always have the greatest reputation as a winning business model. In popular culture, we tend to think of the Roy family in the recent TV hit drama Succession, and going farther back, the Ewings of Dallas and the Carringtons of Dynasty – all cautionary tales about what can happen when family blood and family profits become intertwined. No wonder, then, that the age-old adage has always been never to do business with friends or family, presumably because when personal feelings creep into professional activities, maintaining a healthy separation between the two worlds can prove almost impossible. Or is it? Within the mortgage world, there are families who work together and thrive together, building brands that are rooted in the business genes they share. Boon Brokers, based in Greater Norwich, is a wholeof-market, directly authorised company, originally founded as Business Matters in 2003 by Michael Boon, who is today its managing partner. His son Gerard, who joined the business in 2019, is managing director. “When I went to university, I thought that I would end up in London doing something related to financial services,” Gerard recalls. “My first thought was investment banking, but after studying it at university, I quickly realised that it was not the career for me.” Michael adds, “Naturally, I wanted Gerard to pursue a career of his own choosing, and therefore I never tried to influence him to join my insurance and mortgage brokerage. During his four-year business degree, we discussed what type of business he would like to be part of during his mandatory year in industry. Gerard asked if he could spend this time with my company – and, of course, I was delighted. “He attended all my interviews, and we continually discussed my recommendations and the reasons why. A full schedule of his development was required by Leeds University, and after six months, his degree tutor visited us to assess his progress. Gerard, wanting to obtain highest marks for his year out, decided to sit the mortgage industry standard CeMAP examination, which he passed successfully – and as a result he obtained a

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Michael and Gerard Boon (left to right)

“It’s important that all family members running a business be aligned with the business vision, otherwise the result will be unnecessary conflict” GERARD BOON, BOON BROKERS first for his year with me.” Gerard continues, “When Michael presented the opportunity to work for the family business, which was very small at the time, I saw it as an excellent opportunity to grab the bull by the horns and put my business management degree to use immediately.” Father and son worked quickly to grow the business to where it is today – with 10 staff and a 7,500-strong client base. Since 2019, the business has also become far more technology-focused. Prior to Gerard’s involvement, all clients were seen in person, and the business operated with paper files. It is now an entirely remote service, with online platforms and automated systems to enable it to scale quickly. “Gerard very quickly understood that most brokers were not adapting to the fast technology changes that www.mortgageintroducer.com

15/11/2023 6:36:39 am

INTERVIEW

FAMILY BUSINESSES were occurring and saw an opportunity to bring all his advanced computer and business skills into operation by joining me,” says Michael. A key decision was to change the business name, to integrate the family name into its branding. “It’s always a big decision to rebrand a business, especially as clients become used to the original name,” Gerard acknowledges. “However, as Boon Brokers incorporates our family surname, it was easy for clients to adapt and they all understood the decision. All family members involved in the business agreed on the name change prior to the re-brand so, thankfully, there was no conflict there.” Michael now has a more part-time role and is largely on hand to provide consultancy advice to Gerard, who runs the business day to day. “With Gerard having shadowed my every move for the first few years and recommended and adapted new ideas, it was very easy for me to step back and let my son put his own stamp on the business,” says Michael.

“We are in communication every day – although I don’t interfere with his decisions in recruiting or running the business, but simply act as mentor” MICHAEL BOON, BOON BROKERS “We are in communication every day – although I don’t interfere with his decisions in recruiting or running the business, but simply act as mentor, and we continue to discuss the changes that occur on a regular basis. I have every confidence in Gerard’s ability and the knowledge he has acquired.” Gerard chimes in, “Fortunately, there is rarely a difference in opinion. This is a blessing, as there is rarely any conflict between the directors. However, if there is a conflict, we will quickly find a compromise to appease both parties. “It’s important that all family members running a business be aligned with the business vision, otherwise the result will be unnecessary conflict at some stage. Prolonged conflict in the business may also result in family members falling out on a personal level, which can put a strain on the family as a whole.” Does the fact that it is a family concern make an impression on its clients? “Running a family business certainly adds value for clients,” responds Gerard. “Rather than running a corporate entity that can be perceived as uncaring and even robotic, running a family business helps to preserve family values. “Our aim is to ensure that all clients feel valued, and we view them as part of our extended family. Regardless www.mortgageintroducer.com

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of how the business grows in the future, we will always retain our family values and ensure that the needs of our clients are never overlooked.” Like any business model, a family set-up will clearly offer both pros and cons. The Boon family says that one of the positives is the immediate trust that you instinctively feel for the other owners – a trust that can be more difficult to establish with colleagues who are not related. The Boons also believe that family members are likely to be far more open with each other about how to run a business, and this transparency will assist the business in making quick decisions and progress. But, conversely, a professional enterprise can intrude on family time. “You will find that you naturally discuss business matters during personal family time,” Gerard admits. “It can be very tempting. This can create stress for all involved and blur the lines between work and family. If possible, you should try to separate work and family time clearly. An effective way of doing this is to ensure that you have a work environment that is separate from your personal living space. This can help you maintain a healthy work-life balance with your family.” While the Boons’ working dynamic is clearly a good one, Gerard notes that family businesses present a risk of potential long-term conflict. “If family members fall out in business, this may result in long-term conflict that’s difficult to resolve on a personal level,” he reasons. So would he advise others to work with family? “This depends on the relationship that you have with your family and their business outlook,” says Gerard. “We are lucky to be not only father and son, but also best friends, and to have the same vision for the business. In circumstances where you have different values from your family, and cannot align in terms of your business mindset, it will likely be better for you to find a different business partner.” The long-term business goal is for Boon Brokers to become a key player in the UK mortgage market, with a national reach. It accepts that to do so, it may need to seek external funding. However, it says it will always endeavour to stay true to its values. “Within just four years, Gerard has doubled our client base and, in my opinion, he has probably designed and put into practice the best systems for his chosen career in our industry as a mortgage broker,” sums up Michael. “Yes, I am a very proud father, and could not be more pleased that he decided to join me in our industry and not proceed down the path of investment banking.” Gerard agrees and considers it a nice thought that his children might run the business one day – but only if they want to do so. “Looking back, I am so glad that I took that opportunity to join the family business, and I’m excited for what the future holds,” he says. It’s a distinctly family affair at The Right Mortgage and Protection Network, too. Based in Solihull, West NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:36:47 am

INTERVIEW

FAMILY BUSINESSES

(Left to right) Drew Wilson, Amy Garry, Martin Wilson, Amanda Wilson & Victoria Clark

Midlands, the company is an independent network for mortgage, protection, equity release, and private healthcare advisers, with over 750 members across the UK. The network was founded by Amanda and Martin Wilson, with another couple, Adam and Tania Stretton, almost ten years ago. Over time, three of the five Wilson offspring have joined the business. “It has always been very important to us that the business be proud to be a family business,” Amanda says. “Not only does this include our staff, but the ethos also stretches to our advisers, too. “We are proud of the fact our children work with us, so we are not here to be taken over or bought out, as we care about the advisers’ futures as much as that of our own family. Even though we are a national

Amanda admits that it hadn’t been her plan for her children to follow her into the business and work together. “I certainly didn’t think Victoria would, but I’m so pleased we all do and can be rewarded together for our enthusiasm and love of the business,” she enthuses. Victoria identifies the advantages of working together as a family. “The pros are that we all are working toward the same goal with a common interest,” she offers. “We are all there to support and care for each other, understanding the ups and downs in the workplace. The energy family provides is injected into the business overall.” Amanda divulges, “You can’t get away from work. There are a fair few arguments of ‘passion’, let’s say, with various opinions expressed. Any family holiday results in a working holiday. But we do only really see the pros, as we can really support each other day to day. Any challenges posed can be resolved as, ultimately, we are family and have the same goal.” Both mother and daughter say that it’s a ground rule not to let personal, non-related work discussions affect anything in the working environment. But is it tempting to discuss business outside of work? “We always talk shop,” acknowledges Amanda. Victoria concurs, but adds, “With my husband running an advisor firm himself within the network – The Right Advice – we do try to put limits on shop talk on holidays, but we both care too much to switch off from it completely.”

“The pros are that we all are working toward the same goal with a common interest. We are all there to support and care for each other” VICTORIA CLARK, THE RIGHT MORTGAGE AND PROTECTION NETWORK

Amanda Wilson

company with 70-plus staff, we hope our family energy is embedded throughout. We are here from cradle to grave for all of our advisers.” Amanda’s daughter Victoria Clark is head of equity release at the network. “I definitely did not grow up dreaming of financial services as my career path,” confides Victoria. “However, little did I know it was always going to be my calling.”

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Victoria Clark

www.mortgageintroducer.com

15/11/2023 6:36:58 am

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FAMILY BUSINESSES

Left to right, Dale and Vic Jannels

“We all understand what is good and bad for the business and what is good and bad for the family” VIC JANNELS, ASSOCIATION OF SHORT TERM LENDERS Would they both recommend others to work with family members? “Yes, I have a lot of friends with family businesses who work together and play together,” replies Amanda. But Victoria more cautiously advised, “I would recommend it to those who are prepared to accept it isn’t a 9-to-5 job and it becomes a part of life. However, it brings so many advantages” The Right Mortgage and Protection Network will always be a family business, believes Amanda. “Two out of three sons-in-law work with us, too,” she says proudly, “and our youngest is doing his accountancy qualification with an accountancy firm before he comes across. Our eldest lives in Australia – otherwise, she’d be in our marketing department.” Victoria is, meanwhile, pleased that things have worked out as they have. “Now I am older, to look at where I am with my husband and my family, I am grateful to be where I am and look forward to the future with the network,” she says, and adds with a laugh, “I would now tell my younger self not to fight it so much.” The Jannels family is a long-established name within the mortgage industry. Vic Jannels, who is CEO of the Association of Short Term Lenders and executive chairman of Impact Specialist Finance (formerly AToM), started in the profession over 50 years ago, joining the then Provincial Building Society. His son Dale, who is managing director at Impact Specialist Finance and CEO at One Mortgage System (OMS), began his journey at Legal & General on the accountancy side and quickly moved into its broker www.mortgageintroducer.com

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division. Today he is part of the industry contact group of the Association of Mortgage Intermediaries (AMI) and, more recently, the executive committee of the Open Property Data Association (OPDA). Vic’s son Neal is in the industry too, as managing director of OMS. He initially worked for AToM, where he joined its IT team after university. The core system was built using Neal’s IT knowledge, and this grew until it was obvious a standalone business was beckoning, leading to the creation of OMS. “In the early days I was keen for the boys to plough their own furrows and find out what life is like in the commercial world,” Vic remembers. “In fairness, it was quite apparent that they were determined to seek their own futures. “Both found their feet externally and, when they felt the time was right, they joined the business. From their own employment history, it can be seen that the financial world was beckoning. They individually approached us when they were ready and, in truth, we were delighted!” It wasn’t Dale’s plan to follow Vic into the industry. “We used to have his clients in the house at points, and mortgages interested me,” he says, looking back. “It was only when my role at L&G slowed and progression didn’t seem to be quick that I decided to look elsewhere. Vic’s number two at the time said, ‘Why don’t you try

“Shop will nearly always come into the conversations at some point.... Obviously as well as the family, it’s our common interest” DALE JANNELS, ONE MORTGAGE SYSTEM mortgages?’ and that, as they say, was that.” Neal believes it was inevitable that he would be involved in the family business, though he did have another ambition. “Being a pro footballer was always the dream, but the reality was I was never good enough,” he says modestly. Vic considers Impact to be in essence a family business, with his wife Sheila and Dale and Neal all directors of the business. Family members Catherine, Carolyn, and Deborah are all involved, too, with younger ones stepping in to do administrative tasks in between their study and sporting commitments. The firm also aims to treat staff as though they are family.“I am immensely proud of what the business has achieved in the 30-plus years since launch,” Vic comments. “We have been honoured with many awards both for the business and individually. There are always challenges – after all, I am very much old-school in my thinking, whereas the boys bring modern-day thinking and skills to the table – but we manage to talk any issues through NOVEMBER 2023 MORTGAGE INTRODUCER

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FAMILY BUSINESSES and almost always agree on decisions that make sense.” Dale admits it hasn’t always been plain sailing. “At the outset, I found it difficult,” he says. “I was a very young person in an existentially older-thinking marketplace. It was hard to be taken seriously, and many asked my age when I walked into a meeting! Thank goodness those days have gone. “I also found it hard being the boss’s son, and you definitely have to work twice as hard to prove yourself to the other staff members. “Things changed once I got to management and then director status. As with all families, there are agreements and disagreements, but we work well as a team of directors – and, in the main, they come ‘round to my way of thinking!” he says wryly. Dale adds, “Both Neal and I have had big shoes to fill, but the market is changing and becoming very tech-based, so we’re in a good position to be at the forefront of this for some time yet. “ Neal agrees that working together as family can be testing. “It can be extremely hard sometimes, as it’s inevitable that we will not always agree on everything,” he confesses. “However, it also has a lot of added benefits, as important business decisions can be made very quickly and the direction of the business can change without having to traverse loads of external board meetings or gain remote, individual signoffs.” Vic explains, “Actually, because we all have varying roles within the two businesses, Impact and OMS, we very rarely meet up during office hours, and the fact that we are all in the same industry has never been an issue. “Whilst we all have and manage our individual identities, we remain very aware of, and are comfortable with, the need to work together. OMS has massively captured the imagination of the mortgage sector, broker and lender alike, and we are comfortable in its ability to meet the scalability required to meet growing market challenges.” Dale says he can’t identify any issues. “We all have our own roles and own PR outputs and as a result we complement what each other does,” he elaborates. This chimes with Neal, who adds, “We all have knowledge of different areas, so the pros are that we can use each other’s experience to help move the businesses along.” There has never been a need for the Jannels family to set any specific ground rules about their working relationships, Vic makes clear. “We all understand what is good and bad for the business and what is good and bad for the family,” he says simply. “We will, when needed, talk things over and compromise. Mainly, when we are together there are other things that take our attention, and we will debate football, golf, and anything else that takes our fancy! “We will debate, sometimes heatedly, but this has never affected the ability to keep business and family

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NOVEMBER 2023

Neal Jannels

“It can be extremely hard sometimes, as it’s inevitable that we will not always agree on everything” NEAL JANNELS, ONE MORTGAGE SYSTEM matters in separate compartments. Once you let the two overlap, trouble is likely to follow. Overall, I like to think that we are friends as well as family and business colleagues.” Dale accepts that some shop talk does inevitably creep into family time. “Whether tempting or not, shop will nearly always come into the conversations at some point,” he recognises, “much to the delight of our sister, who only flirts with the business on occasion. Obviously as well as the family, it’s our common interest, and things will crop up that may need dealing with or mentioning when we are together.” It seems likely that the Jannels name will continue to be an enduring one in the mortgage industry for years to come. “My children have all had an insight into Impact or OMS at some point,” Dale notes. “So the floor is open to them, if that’s a career they decide to pursue.’” Neal concurs. “Of course, it would be good to keep the family involved and pass it down through the generations,” he says. “I am hoping my children follow if they want to. It’s great we can all work together – we might not be industry legends like Vic is, but it’s good to keep the name in the marketplace.” M I www.mortgageintroducer.com

15/11/2023 6:37:11 am

FEATURE IN OUR NEXT SUPPLEMENT Put your brand at the forefront of the UK specialist finance market by supporting one of Mortgage Introducer’s upcoming guides. Here’s what’s coming up in 2024... LATER LIFE (March)

SPECIALIST LENDING (June)

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CONTACT US MATT BOND Commercial Director matt.bond@keymedia.com M 07525 456869 T +44 203 868 3406 ext.123 www.mortgageintroducer.com

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NOVEMBER 2023

MORTGAGE INTRODUCER

15/11/2023 6:40:28 am

REVIEW

PROTECTION

Why the Christmas break offers opportunity Alan Lakey director, CI Expert

s we approach the end of another year, the one matter you will all be pleased to avoid over Christmas will be consumer duty. This has dominated adviser thinking throughout the year, and will continue through next year when the FCA focuses on checking that advisers are paying more than lip service to the matter. We’ve continually heard how advisers have to up their game, etc. And now, you’ll be pleased to know that this is the last mention of consumer duty within this article. However, its existence does mean that the days of advisers ignoring life, critical illness, and income protection insurance are over. Those who accept their advisory responsibility will be looking to ensure that all of their clients are properly protected and regularly reviewed, whilst those who feel out of their depth, are too busy with mortgages, or simply have no interest, will have to signpost the client to a firm with which they have made an arrangement. There are many protection specialist firms eager to agree an arrangement with a busy mortgage broker, and this conveniently resolves the responsibility requirement. As is often the case with regulatory edicts, one can search out those areas where such obligation produces a range of opportunities. Prior to conducting client reviews, the canny adviser can check to see whether the client is overinsured in terms of mortgage protection. Decreasing term

plans written years back will have been issued on the basis of an assumed mortgage interest rate such as eight per cent or as high as 15 per cent. Using an amortisation table – and there are many online – the adviser will be able to work out the current sum of insurance and compare it against the current mortgage balance. This will show the exact element of overinsurance and enable a dialogue that the client will be eager to participate in. Subject to all the usual caveats regarding health, the client may be able to reduce monthly outgoings or, alternatively, retain the premium whilst upgrading the breadth of cover – clearly a win for both client and adviser, and likely to bring in additional clients as a result of the good service. Regular reviews also uncover important changes, such as the birth of a child, which might result in an adjustment to previous advice, with a focus on family income benefit. It might show a client now operating as a limited company and therefore able to obtain tax-efficient relevant life insurance. I have found that family income benefit is often cheaper a few years down the line, and no client will pass up the opportunity to save money in the current climate. Another area for those protection-

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oriented advisers is to revisit clients who been declined or have suffered exclusions or been rated for issues such as BMI, type 2 diabetes, or HIV. Underwriting has moved on, and terms, or better terms, may now be available for these. By way of example, some 20 years ago one of my clients suffered a cancer exclusion and premium hike because three years earlier he had suffered from testicular cancer. A few years later I discussed his situation with various underwriters and located an insurer that would now offer standard terms without any cancer exclusion. Three years after that the client was diagnosed with cancer in his other testicle and received a payout sufficient to repay his mortgage fully. What about those clients for whom finding acceptable terms – or, indeed, any form of acceptance – is proving problematic? There are a number of specialist firms throughout the country that are able to obtain cover or interact with an insurer to obtain superior underwriting outcomes. Firms like Cura and Moneysworth are geared up to accept referrals and reach a concord with the referee. The Christmas break offers a great opportunity to list those clients for whom an urgent review is likely to pay dividends. M I www.mortgageintroducer.com

15/11/2023 6:57:51 am

REVIEW

PROTECTION

How advisers can improve quality metrics with insurers Mike Allison head of protection, Paradigm Mortgage Services

uch of what we do in our daily lives is under scrutiny nowadays, from ratings for credit to ratings for how we behave in taxis when we travel with Uber. This can ultimately have consequences on our ability to access various services. If we look at our business dealings in the world of advising, we are under scrutiny, too, whether we like it or not. For some time, insurers have been collating data on the “quality” of the protection cases we write – and of course this is commonplace in the mortgage lending world, too, with the ultimate sanction in some instances being an inability to access products for clients. Since the introduction of consumer duty, more focus has been placed on quality of distribution, and most firms will receive some sort of rating from providers on how they are performing against their peers across a set of quality measures. The scores can be used by providers to decide whether or not they wish to deal with a given advisers. Consumer duty has brought about greater scrutiny of insurers to make sure they are aware of the quality of advisers who are distributing their products. Ultimately, they are on the hook, too, if misdemeanours come to light. In the past the focus has been more on lapses or cancellations, and that has been the key measure. Now things are changing, and with the principle of the avoidance of foreseeable harm to clients under the consumer duty, much of the scrutiny is falling on underwriting and the

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responses of clients to health questions affecting underwriting decisions. There is little doubt the industry wants to clear up many of the misconceptions that exist regarding claims payouts because Joe Public still thinks insurers don’t pay out at claim stage. While this is something of a myth in the life, CI, and IP worlds, the reality is that some claims still do not get paid because of what insurers generally refer to as “misrepresentation” on application forms. As claims scrutiny becomes more focused on this area, we need to see that all possible steps are taken to ensure misrepresentation does not occur, so at claim the surety of payout is there. There are a couple of steps that can be taken to try to avoid this. The first, and probably the most straightforward, is encouraging clients to read through the application questions carefully and consider their responses to those questions before sending them to insurers. This sounds painfully obvious to most advisers – but believe me, I have seen stats to the contrary. As you know, many insurers now contact clients post-sale and ask for confirmation of answers, and some go further by sampling GP data. A second step is to tell clients this is going to happen and encourage them to respond to insurers. This will have a positive effect on your own CYD (confirm your details) scores with insurers. The first step is probably a little more time-consuming and involves the improvement of soft skills in questioning techniques. There is little doubt that drawing out better responses from clients when looking at health questions means more accurate responses, thereby leading to less chance of misrepresentation. In light of this, the question is, “Should advisers change their

approach to soft skills during the protection conversation” – especially when it comes to the awkward underwriting questions? Perhaps this can be satisfied by putting protection in front of people in a different way, so they see more value in it. By focusing on getting the answers correct, you can pretty much ensure that in the event of a claim the policy will pay out, and you can thus allay any fears that it will not. If the old adage of “What gets measured, gets done” is applied, then clients will more than likely open up and give the correct answers to the questions. At Paradigm we recently held some soft skills workshops in conjunction with AVIVA. They were so well received that we are now taking the recordings and turning them into learning material for new advisers, and for those who either haven’t sold protection for a while or wish to look at a different approach to doing so. Ultimately, using soft-skills questioning techniques doesn’t need to stop at underwriting – by broadening the subject of protection, by talking about income security and financial resilience, clients may see more value in purchasing it – something we are all working towards. If clients do want to misrepresent things, you are never going to stop them – but explaining the value in getting the right answers will not only help them, but also help you as an adviser. This is because insurers will no doubt continue to use quality measures as a tool to help themselves distinguish the quality of one firm from another. In future, insurers could use the scores they collate for decisions on levels of commissions paid or, indeed, pricing for clients – but for now, getting it right means peace of mind all-’round. M I

NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:37:48 am

REVIEW

RECRUITMENT

Mind the gap Pete Gwilliam owner, Virtus Search

he gender pay gap in the finance and insurance sector was more than double the national average in 2022. Britain’s finance industry had an average gender pay gap of 22.7 per cent in 2022–23, only marginally below the 23 per cent reported in 2021–22 (published on the government’s Gender Pay Gap Service site). The finance sector reported the nation’s second-widest average gender pay gap last year, ranking just behind the 23.2 per cent of the education sector. Banks had the greatest gap among larger finance companies, and their statements published alongside their filings indicated that a lack of women in senior positions was the major cause of the gaps. Under UK law, companies, charities, and public sector departments with 250 employees or more have had to publish annual gender pay-gap figures since 2017. In 2022–23, the median gender pay gap across all reporting firms was 9.4 per cent – the same level as when mandatory pay-gap reporting began. It should be understood that the gender pay gap is not the same as equal pay, and most firms will state that they are confident that across their organisations, men and women are paid equally for doing equal jobs (equal pay is the requirement that all men and women who carry out the same or similar jobs be paid the same). Of course, a lot add that they remain committed to ensuring that all have an equal chance to fulfil their career aspirations and potential – whatever their gender. The gender pay gap highlights

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broader societal and workplace inequalities. It reflects systemic issues, gender bias, and in particular women’s underrepresentation in higherpaying roles. Closing the gender pay gap is essential for promoting economic fairness, inclusion, and gender equality, and ultimately for enabling firms to avoid the group think that comes from having a large concentration of males in exec and leadership roles. The disparity between the number (and pay) of men and women in executive and management roles is a multi-layered issue that at its heart is correlated to gender biases in hiring and promotion processes, and to the fact that many women have more “expected” of them than men when balancing work, family life, and caring responsibilities. At its core, the biggest consequence for failing to close the gap should be that the firms in question won’t retain and attract high-calibre female professionals. I hope my thoughts on how to interrogate any firm’s commitment to addressing the imbalance oﬀer some constructive approaches. The first step for women who are currently in a firm with 250+ employers (or who are considering joining one) should be to assess the number of women in senior management roles and on the company’s board of directors. That’s because a lack of representation may be an indicator of gender inequality (a firm’s broader commitment to diversity and inclusion, including initiatives related to race, ethnicity, disability, and LGBTQ+ inclusion, is also a strong indicator of a more equitable workplace). Based upon what is found in the pay gap report, question the firm’s policies and practices related to promotions and pay raises – do they sound

NOVEMBER 2023

genuinely transparent, equitable, and based on merit? When did the firm last conduct an equal pay audit to identify (and rectify) any discrepancies in pay between genders for equivalent roles? How committed is the firm to pay transparency, and are all employees informed about salary ranges, criteria for bonuses, and promotion processes? Does the firm have progressive policies related to flexible working arrangements, parental leave, and support for caregivers? These policies aﬀect gender equality in the workplace. It’s important to speak to current or former female employees about their experiences regarding pay equity, gender equality, and workplace culture. Understand the opportunities for career growth and advancement within the organization, especially for women, and in particular look for mentoring and sponsorship programs that can support Women’s career progression. With the lack of progress and attention in addressing the pay gap (and firms not suﬀering any tangible consequences on the matter), being proactive and carefully assessing a firm’s values and its appetite for change is really essential for women who don’t want to find themselves disappointed at the lack of progress over the next several years of their careers. M I www.mortgageintroducer.com

15/11/2023 6:38:21 am

REVIEW

TECHNOLOGY

Our survey shows lenders were ahead of the shift from E to S Steve Carruthers business development director, Iress

he start of November marks two years since the UK government hosted the international climate conference in Glasgow. While the outcomes reached at COP26 fell short of what the UK had hoped for, the gathering of global leaders did achieve international commitment to the Glasgow Climate Pact. The pact aims to limit the rise in global temperatures to 1.5C – something the British COP presidency argued would “only be achieved if every country delivers on what they have pledged.” Following 18 months of global lockdowns enforced by governments around the world during the COVID pandemic, there was tangible evidence of the immediate environmental benefit that reducing fossil fuel use delivered. The maps produced by NASA1 at the time showed just how dramatic the drop in CO2 emissions was when international travel was suspended and business districts closed. Public support for tackling climate change was strong – those who saved money during months working from home poured it into funds branded ESG. Environmental, social, and governance agendas dominated talk in the economy. The former governor of the Bank of England, Mark Carney, was centre stage, thrashing out carbon trading market standards. But as inflation began to take hold in 2022, energy bills soared in the wake of the Russian invasion of Ukraine, and the supply-chain hangover pushed import costs through the roof, the popularity of

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the green agenda waned. Pressure from the right of the Conservative party, together with the public realisation that delivering on netzero targets was going to cost the earth – and that households would be forced to bear those costs – led ultimately to the prime minister’s U-turn on green policies last month. A ban on the sale of new petrol and diesel cars from 2030 was pushed back to 2035. Rules forcing private landlords to upgrade rental properties’ energyefficiency standards from a minimum of EPC band E to band C by 2028 were shelved. Gas boilers are here to stay for longer, and mooted proposals requiring everyone to eat less meat and dairy, to carpool, and to step up recycling targets have been scrapped. For mortgage lenders, these rollbacks were not unanticipated. It’s become increasingly clear that such a rigid adherence to green policies is jarring in the face of today’s economic reality, public spirit, and – vitally for those of us operating in the financial services sector – regulation. The Financial Conduct Authority’s consumer duty rules, which came into effect on 31 July this year, have shifted the dial on ESG. As millions of low- and middle-income households are forced to make painful financial choices or struggle to make ends meet, people’s welfare is now taking precedence over a future that still seems distant. Our annual Mortgage Efficiency Survey shows lenders were already there well before consumer duty became law. The cost-of-living crisis, inflation, and the Bank of England’s relentless determination to get the base rate back up over five per cent put the writing on the wall – perhaps ironically – just as COP26 drew to a close. It is the social agenda and its implications for corporate governance that lead the ESG debate today –

though our extensive research also found that environmental risk management remains a high priority for lenders. The report showed that the issue of environmental mortgage prisoners remains very present. Some lenders have developed green mortgage products, but most lenders we spoke to felt consumers were not looking for this and that more policy steer is required before much else will get done. Lenders also told us they have a renewed focus on addressing risk through affordability considerations. Borrowing costs have become crucial, leading to a surge in product transfers for borrowers seeking lower rates without additional affordability checks. This has quickly increased concerns around affordability, sharpening lenders’ focus on how to deal with distressed borrowers while keeping a firm hand on governance and regulatory compliance. The lenders we spoke to during our research were fairly comfortable with their progress toward delivering against consumer duty. Fair value assessments are mostly complete, yet many echoed the sentiment that much remained to be done. Many told us they have been developing their dashboards to monitor performance to new standards. The past year has seen a gear change in the demands made of lenders. Speed into and out of the market with product changes, and in response to competitors’ product changes, has become vital to maintain service standards while not compromising on pipelines. Our technology has a role to play in all of this, yet it is a role that is evolving, too. By everyone’s admission, it has much to offer in terms of speed and reach, consistency, and oversight. M I

https://www.giss.nasa.gov/research/ briefs/2021_hickman_01/.

NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 9:27:16 pm

REVIEW

SECOND-CHARGE

Does the second-charge market need a consistent message to reach more brokers? Tony Marshall CEO, Equifinance

heartfelt comment left by a mortgage broker on a recent forum said that the secondcharge market should be experiencing its best figures in recent years and yet had failed to take advantage of the increased interest rates working themselves through first-charge lending. His question was why? Having been involved in the second-charge market for much of my career, I have fought for what seems for many years to see second-charge become a viable and valuable alternative to remortgages. The reasons why have been well documented, but, as the broker on the forum said, the current interest rates in first-charge lending should have made it a slam dunk – thus my plea for more brokers to at least consider a second-charge rather than opt for a remortgage. The client’s existing mortgage, if it has been held for at least two years on a fixed rate, should be something that is cherished, and cannot be replicated by remortgaging in today’s higherrate environment. So why aren’t we seeing a surge in second-charge business? I think the answers are complex, but one of the major factors is the need for positive messaging from the industry

itself about what second-charge has to offer. There are other individual champions like me who talk about the opportunities that secondcharge lending represents to broker clients who want to raise funds, but somehow the message isn’t getting out fast enough. In order to clarify what I mean, here are some circumstances in which a second-charge should always be considered with the same diligence as a remortgage. • If the rate on a current mortgage is low and current rates have moved significantly higher, it may not be in a client’s best interests to reschedule the entire balance plus additional borrowing at a higher rate. • The purpose of the loan may be less palatable to a new firstcharge lender. • There may have been some deterioration in a client’s credit profile, making it more difficult to remortgage. • A client may be subject to ERCs that create an extra and unforeseen switching cost to leave the existing mortgage. • A client’s first-charge lender may only allow further advances on an advised basis through their own advisers. • A client may want to borrow the amount over a different term than the first. • Does the client need the extra funds quickly? If so, a secondcharge could be quicker. • If a client’s employment is complex, it might lead to rejection by first-charge lenders

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All these circumstances may be addressed by a secured secondcharge offering very effectively. The second-charge industry, small though it is in comparison with its first-charge sibling, has developed products over the years to suit most circumstances, and at rates that are comparable to firsts at the prime end of the spectrum. How does the regulator see the situation? Of course, we know they want the customer to be advised appropriately, and the adviser is duty-bound to identify the best solution. Consumer duty has put extra pressure on brokers to think very carefully about advice and recommendations, and perhaps it is still early days for consumer duty to have a significant effect on the way brokers approach the best solutions for customer capital raising. As far as lenders are concerned, we don’t advise broker clients. That’s not our job – we are here to provide solutions to you and your clients that are fit for purpose, at the right cost, in the most appropriate way. It’s for you as the customer’s adviser to decide what’s best for your customer. We just need to convince you that there are alternatives out there and deliver them to you. Perhaps we need a new trade body that takes the positive messages about second-charge directly to the broker market, rather than leave it up to individual master brokers and lenders to do the heavy lifting. Either way, we still have a long way to go in seeing second-charge loans really take their place as a viable alternative to remortgaging. M I www.mortgageintroducer.com

15/11/2023 6:39:29 am

SPECIALIST FINANCE INTRODUCER

BUY-TO-LET

What will the autumn statement mean for the market? Steve Cox chief commercial officer, Fleet Mortgages

s I write this, toward the end of October, the noise about what various vested interests want the chancellor to do in his autumn budget statement is ratcheting up, and you would fully expect these murmurings to become something of a roar in the weeks ahead. Already we have had a suggestion that he would like to extend the mortgage guarantee scheme for a further 12 months in order to continue supporting high-LTV lending – and, as you might expect at this time of year, there have been further suggestions he could be looking at a cut to stamp duty once again. If you feel that these two potential measures don’t seem to be pushing the envelope in any sense, then you’re obviously right, but history tells us – at least it does when it comes to stamp duty cuts – that purchase activity tends to receive something of a boost when stamp duty is either cut or there is a holiday from it, and I think there would be few within our industry who wouldn’t want to see an increase in purchase activity right now. Certainly, within the buy-to-let market, we’ve seen a fairly acute drop-off in purchasing and, while there are many contributing factors to this – not least higher mortgage affordability barriers – it must be said that high stamp duty taxation continues to have an impact, as it has done since the three per cent surcharge was introduced back in April 2016. That, in itself, seems like a lifetime ago, and part of me can’t quite believe we have been living with the surcharge for over seven and a half years. It

www.mortgageintroducer.com

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perhaps puts into context all those calls for it to be scrapped. The chances of this government doing that are slim, but that’s not to say it wouldn’t once again be willing to extend any cut or holiday to landlord purchases as it did during the pandemic. One thing is certain, and that is we have a very complicated picture within the housing market. For a start, we are not looking at shortages of supply just in the private rental sector but also for prospective owner-occupiers, and you might well argue about who “deserves” to get the opportunity to purchase more – landlords or first-time buyers. In an ideal world there would be property available for both, but we live very far from an ideal world, and therefore we appear to have an everdiminishing circle to contain both kinds of wannabe buyers – first-time and landlord – which leaves tenants in a very tricky predicament. You want to buy a home to live in, but there isn’t enough supply at your price point, which leaves you in the PRS, which has falling supply, which leaves you paying more rent, which leaves you less likely to be able to save to buy your own home. And so the roundabout does turn. Will a stamp duty cut help any of the above? It will help some. It will probably help those who are close to having saved up a deposit and it will probably help those landlords who were holding back because of the high cost of stamp duty. If that can be cut, then it’s likely that landlords will make a move. Providing, of course, that the supply exists for them to buy. And, on this, there are some early signs of a healthier environment. Propertymark’s latest Housing Insight Report, published in September but covering August, suggested there had been a 29 per cent increase in the number of new properties for sale compared to the previous month. And it would appear that, if landlords

are willing to make that purchase leap, it’s going to be relatively easy to let out properties given the huge demand. Again according to Propertymark, each agent member had, on average, 197 prospective tenants registered with them in August, as opposed to 149 in July. Compared to the same month in 2022, that was a 32 per cent increase. Now, it may well be that August/ September have seen a sharp rise in registering tenants, particularly bolstered by students trying to get a place for the new academic year – but this is an average right across the board in every part of the country, so you can see that demand continues to go up and up. Within that context, you should know that this is all reflected in the results of Fleet’s latest Rental Barometer. For example, the subdued purchase angle is shown in the fact that the percentage of our purchase business in Q3 dropped to 30 per cent from 32 per cent in the previous quarter. While the average rental cover at origination of the loan went up from 167 per cent to 177 per cent, reflecting higher rents, the average number of investment properties owned by our landlord borrower clients stayed the same at 12. It all suggests that, while it is an incredibly difficult market environment for landlords to purchase in, if they can get over these significant hurdles and can make the maths work, then there are good monthly incomes to be had simply because there are so many tenants for a smaller rental property supply pot. Again, if the chancellor decides to act with a stamp duty cut and if he provides the same opportunity to second-home buyers as to first, I see little to suggest that landlords won’t, at the very least, try to add to portfolios, especially with house prices subdued and significant tenant demand to dip into. It’s why, as ever, we await the autumn statement with considerable interest. M I

NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:40:58 am

SPECIALIST FINANCE INTRODUCER

BUY-TO-LET

Portfolio landlords are likely to continue dominating the market Grant Hendry director of sales, Foundation Home Loans

he UK remains obsessed with the property market, whether in the form of house prices, rents, the costs associated with borrowing, the margins for landlords ... I could go on. Buy-to-let has long played a key role within this obsession, largely due to its past performance, image, public perception – and, of course, misconceptions. It’s no secret, however, that the appetite, aspirations, and practicalities attached to being a private landlord in the UK have changed greatly over the years. I won’t chart all the influencing factors and regulatory impact, as these have been well-documented, but the shift from this being a sector dominated by amateur or accidental landlords to becoming the domain of portfolio landlords has become increasingly evident, especially in recent times. Inevitably, yield continues to play a key role for all landlords, and while we’ve seen average gross yields remain strong over the years, there’s an ever-changing array of additional costs for which landlords have to account carefully. This was evident in the latest research from Benham and Reeves, which analysed the gross rental yield of the average buy-to-let property before comparing this to the net yield actually secured once annual running costs are considered. This concluded that investing in the average buy-to-let property across the UK will set landlords back £289,824, with the average property currently commanding £1,276 per month in rent. This equates to an income of £15,312 per year, a gross

rental yield of 5.3 per cent. The good news is that this gross rental yield has climbed over the last year, up from 4.8 per cent in the last 12 months. However, the research then looked at the net yield secured once the cost of maintaining a buy-to-let is accounted for. The costs incurred included letting agent fees (£1,837), general maintenance costs (£2,898), the cost of an annual gas safety certificate (£80), an electrical safety report certificate (£225) and landlord insurance (£427). In total, these additional costs for the average UK landlord amounted to £5,468. As a result, the net yield secured on the average buy-to-let property comes in at just 3.4 per cent, which has at least climbed from three per cent over the last year. The positive to take from these figures is that while the average net yield may sit at just 3.4 per cent currently, this has increased in strength over the past year to help underline the longevity and consistency attached to a buy-to-let property that is well maintained, in a good area, and property-managed. On the other side of the coin, these average

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yields may not stack up as well as those experienced in the past, and we also have to point out that this doesn’t include the average cost of repaying a BTL mortgage, which has obviously risen for many. But I like to stay positive, and, whilst we have used the word “average” a lot here, a strong proportion of portfolio landlords who have taken a far more methodical approach when adding to and restructuring their portfolios in recent years to help bridge this yield gap are far from average in their attitude and performance. Based largely on the major ingredient of high historic yields, one key property type that continues to capture the attention of such landlords is HMOs. This is a factor that was highlighted in the Q2 2023 Landlord Panel research from BVA BDRC – in conjunction with Foundation Home Loans – which outlined that HMOs and MUBs were generating significantly higher average rental yields when compared to other property types (6 per cent). Within the research, there was also an increased focus on landlord divestment, and it was interesting to note that terraced houses and individual flats were suggested to be the primary target for that divestment. In contrast, HMOs, MUBs, and bungalows were reported to be more protected, a factor that is likely linked to the more robust rental yields being achieved by these property types. With the next iteration of the research currently being collated, it will be interesting to see whether there is any movement in the yield table. I’ll report back accordingly, but what is unlikely to change is the continued dominance of the portfolio landlord in the BTL marketplace – in addition to an increased emphasis on the need for specialist BTL lenders to generate innovative and competitive solutions for this product type and to support the wider needs of the portfolio landlord. M I www.mortgageintroducer.com

15/11/2023 6:41:11 am

SPECIALIST FINANCE INTRODUCER

BUY-TO-LET

Increase in limited company lending oﬀers opportunities for brokers Richard Rowntree MD, mortgages, Paragon Banking Group

he addition of a three per cent surcharge to stamp duty paid on most buy-tolet property purchases and the introduction of Section 24 of the Finance Act, both phased in during the latter part of the last decade, have had a greater impact on the PRS than policymakers appear to have anticipated. After reform was proposed by then-chancellor George Osborne in 2015, a range of stakeholders raised concerns about the impact of restricting buy-to-let mortgage interest tax relief. Following that, the financial secretary at the time, Mel Stride, said that despite it being too early to properly assess the eﬀect of the reform, the government did not expect it “to have a large impact on either house prices or rent levels.” We know that rents have risen substantially in the time since, but, with a series of significant events leading to a period of economic volatility not seen since the global financial crisis, it would be wrong to pin the blame solely on the policy change. A more clear-cut influence of the policy can be seen in the increase in landlords owning properties through limited company structures. The number of limited-company special-purpose vehicles (SPVs) used by landlords swelled from 2015 onwards, with Hamptons data highlighting how the 14,031 SPVs set up that year grew to 47,000 by 2021. Looking at some of the potential benefits of operating through a limited www.mortgageintroducer.com

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company provides us with some likely drivers of this trend. Our recent Limited Company Lending Report highlights how efficient tax treatment is the most prominent. Eighty-two per cent of landlords taking part in Paragon research identified the ability to offset overheads related to mortgage payments as the reason for adopting the limited company route, with 57 per cent citing being eligible to pay corporation tax rather than income tax. This is unsurprising when we look at how Section 24 had the potential to significantly alter landlords’ tax burdens. Previously, landlords could deduct mortgage interest payments and other fees, such as mortgage product fees, from their tax bill, but the reform changed this, with fewer expenses remaining eligible, while all income became subject to taxation – 40 per cent for higher-rate taxpayers and more for those who fall into the additional rate banding. Using limited company structures can mitigate this impact because in many cases landlords are eligible to deduct mortgage interest payments in full from their rental income. Operating via a limited company also offers landlords who fall into higher and additional tax brackets the opportunity to further reduce the tax they pay on rental income. This is because limited companies are subject to corporation tax rates, which have marginal tax rates between 19 per cent and 26.5 per cent depending on profit levels, which are lower than income tax rates. A limited company structure also offers advantages related to inheritance and succession planning. When compared to individual ownership, where properties may be subject to inheritance tax and lengthy

legal processes, holding properties within limited companies can provide a simpler and more tax-efficient method of transferring wealth upon an investor’s death. Investors who are financing property through limited companies may also find that they can borrow more, and that affordability is further helped by lenders typically stressing them at lower interest coverage ratios compared to those to which individual higher-rate taxpayers are subject – 125 per cent vs 145 per cent. Despite these factors driving an increase in buy-to-let limited-company structures, personal name remains the most common way for landlords to own property, with 34 per cent doing so, compared to 23 per cent who use limited companies and 31 per cent who have a mix of both. With research undertaken for our Limited Company Lending Report also suggesting that experienced landlords have increasingly switched to limited-company ownership, while newer entrants to the market appear to be choosing this route early on, a continuation of the trend seems likely. Still, the limited company option isn’t the best route for everyone, and a number of factors need to be considered. Landlords often turn to people who specialise in this area, such as accountants and specialist tax advisers, to help them because limited-company lending is just one feature of buy-to-let, and brokers can’t be experts in them all. I think intermediaries can offer value by gaining a good understanding of their clients and supporting them with broad knowledge of the different things that they should consider when looking for finance, signposting them to other professionals where necessary. M I

NOVEMBER 2023

MORTGAGE INTRODUCER

15/11/2023 6:41:14 am

SPECIALIST FINANCE INTRODUCER

BUY-TO-LET

FLEET OF FOOT Specialist buy-to-let lender Fleet Mortgages is quickly raising its profile, with an increase of well over 50% in its lending completions in just 12 months. Its top team tells Simon Meadows how it’s been done

“W

hat’s interesting,” says Steve Cox, chief commercial officer of specialist buy-to-let lender Fleet Mortgages, “is that quite a lot of brokers have not experienced rates rising at all [before]. If they’ve entered the mortgage advice space in the last seven to eight or nine years, they’ve never seen rates rise.” It’s a striking observation – and a pertinent one in an industry that may often seem dominated by longerestablished mortgage professionals who have experienced the often-cyclical nature of the business. Those coming up through the industry now may need a bit of handholding, suggests Cox, who started out as a broker. “We’re always looking to support the intermediary,” he says. “What are the opportunities? What are the challenges? What is it you need to know as an intermediary to, in turn, be able to impart to landlord customers what we see going on?” Fleet Mortgages, which is based in Fleet, Hampshire, and opened for business in 2014, offers a range of buy-to-let mortgages for clients, whether they are seeking individual or limited-company buy-to-let mortgages or finance for houses in multiple occupation (HMOs) and multi-unit blocks (MUBs). Fleet “has always been completely intermediary-focused,” reflects Cox. “We’ve always been focused on doing our bit of the market as well as we possibly can. Everything we originate is from intermediaries. So – as much as the end customer – the broker’s at the heart of everything we try to do. It’s the lifeblood of Fleet. If we look at buy-to-let as a whole, it’s

dominated by intermediaries rather than direct-to-lender. There is a little bit of business done directly, but the majority is done through intermediaries. So Fleet was set up in the first place as intermediary-only, and that’s where we still are today.” COMPLETIONS

In 2022, Fleet completed over £1.2bn of new lending completions, 58 per cent up on the previous year’s figure of £782m. “From my perspective, and particularly the team in the field and the team on the phones, we attack this as a multifaceted relationship,” notes Cox. “So of course we have strong relationships with distribution, mortgage clubs, networks, packagers, and also perhaps at a more senior level, but we never lose sight of the fact that we need to have that relationship with brokers at the coalface. “So whether they’re sole traders working on their own as a directly authorised firm or they’re working for a bigger brokerage, we need to have relationships across the piece at all levels.” He adds, “Without that multi-layered relationship, we don’t get the intel we need to see what’s really going on in the world and, equally, we just think it’s incredibly important to be able to give our thoughts back at all levels. And ultimately that knowledge that we have and that specialism that we have ends up out there with the customers as well.” Much of Fleet Mortgages’ recent success can reasonably be attributed to its acquisition by Starling Bank in 2021. “Starling bought Fleet because it saw it was a business that was very clear about what it did,” explains Damian Thompson, the lender’s

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Steve Cox

“Buy-to-let is always predicted to die – that’s been predicted many times over the years, by many people.… However, we don’t see evidence of our kind of landlord exiting in droves” STEVE COX, CHIEF COMMERCIAL OFFICER, FLEET MORTGAGES interim CEO. “It does specialist buy-to-let lending. It’s not trying to be all things to all people, and we also saw that it is very good at what it does. It’s built to operate really effectively in that market. To serve your intermediary well, but also to do good lending, you’ve got to know what you’re doing.” He added, “From my CEO perspective, but also from that of a Starling shareholder, the objective has been to invest in Fleet and its capabilities, to make it even better at www.mortgageintroducer.com

15/11/2023 6:41:58 am

SPECIALIST FINANCE INTRODUCER

BUY-TO-LET what it does and also to be a bigger part of the market, a more confident part of the market. “The idea is not to create a load of new products, start doing different things, start doing owner-occupied lending. This is very much about being really in the top tier of specialist buy-to-let lenders in terms of capability. We don’t necessarily want to be or need to be the biggest in the market. We definitely feel like we can be the best in the market in terms of what people think about us, how intermediaries think about us from the service that Steve’s team gives intermediaries on a day-to-day basis, doing good lending, lending to the right people.”

Starling Bank for 18 months. “I have a long track record in funding and securitising assets, so I worked very closely with the specialist mortgage lenders in the UK,” he notes, adding that he has a historic link with the business he now leads. “It was my team at NatWest that put in place the very first warehouse funding line for Fleet-originated mortgages when they got started. So I’ve had a close affinity with Fleet, right from the start. It was therefore really pleasing to be able to get close to the business again when I joined Starling, and even better to have the privilege of joining as interim CEO.”

PREMIER LEAGUE

Reflecting on the current market, Thompson believes the portfolio buy-tolet market is bearing up remarkably well. “Certainly that market is, in terms of the volumes we’re seeing, performing much, much better than the entirety of the buy-to-let market, which is indicative of something,” he states. “Secondly, the actual performance of existing portfolios in terms of arrears levels and defaults is really exceptionally good, so, in our experience, that would suggest that that shock is not manifesting itself in real stress for portfolio landlords, to the extent where they can’t pay their mortgages. “People have invested over time, they’ve built up equity in their portfolios over time, they’ve got a diversity of properties, they’ve got a diversity of income. It also means that probably it’s unlikely that all of their mortgages are reverting in the same short window, so they’re not seeing the payment shocks seen by people who’ve got an individual buy-to-let property or an individual owner-occupied property.” He concludes, I think it speaks well to that sector and to the macro trends in terms of very limited house-building growth. The number of households in the UK continues to grow and is reflected in what we’re seeing in a very, very tight rental market. I think it’s broadly supportive of the buy-to-let story, notwithstanding the fact that mortgages are more expensive to service.” Despite acknowledging that it is

PERFORMANCE

Cox, who’s an avid Crystal Palace fan, can’t resist a soccer-related reference. “Using a football analogy, I describe Fleet before as top of the Championship or thereabouts, working with capital markets funders,” he says. “With the acquisition by Starling, I would say we became newly promoted members of the Premier League, in terms of a really solid, understanding parent, access to funding that we previously wouldn’t have had playing capital markets, and really just investment in Fleet as a business to make sure that we’re offering the right products, the right service to intermediary partners. As well, it’s about Fleet growing up, in terms of the resources that we now have internally.” He adds, “It wasn’t that we were lacking anything critical before; it’s just about the investment that Starling have put into Fleet, to make us competitive whatever the market holds – tough market or easier market. But I guess it’s the sense of Starling wanting Fleet to be in this for the long term, so the roots of Fleet are still there, the culture – it’s a relatively small business still.” Cox points out that the lender’s staff head count has risen to 170, with much of that growth in operations. “It’s having Starling’s backing to be able to look at things medium- and long-term, rather than hand-to-mouth when we were a smaller business reliant on capital markets,” he observes. Before becoming directly involved with Fleet, Thompson had been at www.mortgageintroducer.com

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Damian Thompson

“We don’t necessarily want to be or need to be the biggest in the market. We definitely feel like we can be the best in the market in terms of what people think about us” DAMIAN THOMPSON, INTERIM CEO, FLEET MORTGAGES a tough market, Cox also sounds an optimistic note. “We’ve probably punched above our weight in terms of how far the whole buy-to-let market has gone, versus our performance,” he offers, and adds wryly, “Buy-to-let is always predicted to die – that’s been predicted many times over the years, by many people. I’m very much firmly in the camp of ‘Yeah, it is tougher at the moment because there’s obviously stress on affordability, given the interest rate environment we’re now in.’ However, we don’t see evidence of our kind of landlord exiting in droves.” Summing up, Cox adds, “In every tough economic period, tenancy demand rises. We’re seeing rents rising. So, for me, it’s as simple as people have got to live somewhere, and that tenancy demand is going to be sucked up by the private rented sector. So, it’s trickier, but I don’t see buy-to-let collapsing, as perhaps some people would like to predict.” M I

NOVEMBER 2023 MORTGAGE INTRODUCER

15/11/2023 6:42:05 am

FEATURE

INTERVIEW

My first deal Michelle Lawson, mortgage adviser and director at Lawson Financial, recalls her nerves when starting her career – and how, early on, she helped a young Polish couple fulfil their dream of a UK home of their own

usiness and finance had always been an interest of mine, but I actually started my career in the travel industry. I fancied a change and my mum, who worked for Cheltenham and Gloucester Building Society at the time, said, “Just come and work with me for a couple of hours.” So I said, “Okay, I’ll do it.” I started working on the investment helpline and had the opportunity to do my CeMAP training. So I was working parttime and studying when my baby daughter was sleeping. In around 2003–4, I began working with a telephone-based brokerage. It was my first foray into the industry, dealing with residential and buy-to-let mortgages. At the time, they were quite basic, vanilla deals, with clients who had clean credit, and then gradually, as you gained experience, you’d get the self-employed cases, when you were beginning to understand about the different permutations of income and credit histories. It was a real pinch-yourself moment when you thought, “Oh, this is actually quite big,” because you’re changing people’s lives. My biggest fear when I started was that I was going to mess up, I like to know what I’m talking about. I can remember thinking, “I’ve got no idea what I’m doing,” and saying to the guys on my team, “How do you know all of this?” They said you just learn it. I said, “Right now I’m feeling like I’ve just got too much going into my head and I’m not retaining anything.” I got myself a little black book, in which I wrote all the different lender quirks, such as who would do which minimum incomes levels, their policies, calculations, and stuff like that. It sits right next to me today. I didn’t want to be somebody’s nuisance, asking questions all of the time. I remember

MORTGAGE INTRODUCER

saying to my colleagues, “Oh, what do I do with this?” and they would say, “You know what? You tell us what you think, and we’ll tell you if it’s wrong.” When I call lenders now, I can tell which staff are inexperienced or new, because you can feel that they’re swimming in deep water. I say to them, “It’s okay to say that you’re new, but all I am asking you is that if you don’t know the answer, don’t guess. Go off to ask someone – that’s fine.” I think of all the times when I started out, when more experienced people could probably spot my inexperience a mile off, too.

“My biggest fear when I started was that I was going to mess up, I like to know what I’m talking about” MICHELLE LAWSON, LAWSON FINANCIAL I remember doing one early mortgage deal. They were an unmarried Polish couple in their mid-to-late twenties and had come to the UK for a fresh start, leaving all of their family for a better life. They wanted to buy a new-build, three-bedroom house in Hampshire, and had managed to save a good deposit. It was real blow-your-mind stuﬀ – they spoke only broken English, so there was a significant language barrier, and we had things to address like their settled status. I was trying to explain to them the housebuying process in the UK. They kept saying, “This is really easy in Poland,” and I would say, “I know, but it’s not here.” They got the property that they wanted, and they were incredibly grateful when

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Michelle Lawson

everything went through. That couple have moved three times since they’ve been here in the UK, and are still customers. Their English is now amazing and so fluent, and they are married and have children. In the time that I have been doing this, I’ve actually had cases where I’ve written mortgages for parents and I’m now actually doing so for their kids, which is scary! I always wanted to make things very personal. I always make a note of people’s names in the early part of a conversation and use them, which for me shows that you’re listening and taking on board what they’re saying. I eventually worked out that I didn’t want to work for somebody else and took the bull by the horns and set up on my own in 2014, in Fareham, Hampshire. I have never looked back. I was initially part of the Stonebridge network, while I was establishing myself. I really loved the ethos. After about a year, my husband Dan came into the business, as a director and administrator, and it is just going from strength to strength. If I were going to give advice to someone starting out, I would say you’ve just got to stick with it and go with the courage of your convictions. Every person who reaches out to you with their experience – take it on board, write it down, use it and build on it. I probably would recommend joining a big corporate agent to learn the job. I think going self-employed straight oﬀ is a really big ask because it can be a lonely environment to work in. You’re in charge of your own destiny with this job, whether you’re employed or selfemployed. You will only be as good as you want to be, and there are a lot of resources out there to enable you to get there. M I www.mortgageintroducer.com

15/11/2023 6:42:39 am

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