Book now for CML conference on role of intermediaries
Published: 19 September 2016 | Author: Bernard Clarke
On Thursday, the CML is hosting a conference focusing on the role of intermediaries in the mortgage market. And today, the chair of the conference, Virgin Money mortgages director Peter Rogerson, sets out his own views on some of the key issues that will come under scrutiny at the event.
In the question-and-answer exchange below, Peter predicts that intermediary sales – already accounting for around two-thirds of all mortgage transactions – will continue to grow. Meanwhile, lenders, keen to maintain a high street presence while serving a growing number of millennials who want to transact exclusively online, will have to think differently about the role of branches, he says.
Thursday’s conference – being held at the America Square Conference Centre, London – provides an opportunity to join mortgage professionals to hear presentations and debates with contributions from some of most influential voices in the industry.
Delegates at the conference will be presented with new CML data on developments in the intermediary sector, and will hear speakers addressing a range of issues including product development, how technology can empower borrowers, developments in originating new lending, and the customer relationship.
Those interested in booking places at the event, which is open both to members of the CML and non-members, can do so here - click on the 'book now' button.
Q. Two-thirds of lender business currently comes via intermediaries. Have intermediary sales peaked?
A. No, I don’t believe so. The customer will decide how they want to buy mortgages or find advice. The market is competitive and there is a lot of choice. Customers need advice and they will go where they can get it.
Q. What do you think the numbers will show in the future?
A. We certainly believe that the gross lending market will continue to grow and thus in absolute terms the volume of lending through intermediaries should continue to grow. But that doesn’t mean that lenders will not invest in their own direct propositions so that they maintain their direct share of lending. If we can keep the market growing, then everybody will be better off.
Q. It’s harder for lenders to justify keeping smaller branches open, particularly when millennials want to do everything online. What are the implications of these trends for intermediaries?
A. Millennials behave differently to the older generations, and we all need to adapt to that. But we shouldn’t assume that everybody wants to self-serve. Mortgages are still seen to be relatively complex, and customers will always want advice. Hybrid technology solutions will help support customers in a way that they feel comfortable.
As for keeping branches open, we just need to think differently about the role of branches. They need to adapt to meet the needs of customers today. Digitisation of transactions doesn’t automatically mean that a physical location is obsolete. We have incorporated some of our stores into our unique customer lounge facilities, for example.
Q. What are the prospects for delivering ‘robo-advice’ successfully? What effect will this have on mortgage distribution?
A. Customers want to be engaged in the products and services they buy. Brokers are worried about robo-advice but it should be possible for a mortgage adviser to use technology to support the customer experience, rather than assume that it totally replaces the advice they give. Brokers and lenders need to embrace technology to help the customer, who increasingly expects things on demand. Online tools can help an adviser engage with a customer remotely, at a time that suits them, not us.
Q. Comparison websites have led to intensive scrutiny of headline rates. Does that diminish the role of intermediaries?
A. Comparison websites have a role, but it is important that they do not mislead. The CML and Which? are working on an initiative to try and improve the content of comparison websites, and lenders such as Virgin Money are fully supportive of this.
Q. What impact will the CML’s ‘working together’ guide have on the market?
A. Guides that set out good practice for the relationship between lenders and intermediaries working effectively together in the best interests of the customer are to be welcomed. Of course, they must be read in conjunction with other relevant industry codes of practice and be updated to ensure they remain abreast of industry developments. It’s good to have the guidelines, but I also believe it’s equally vital that lenders and their intermediary partners are inwardly motivated to do the right thing through their relationship, and that is certainly the case with us.
Q. How will the market be affected by trends in different market segments, like buy-to-let, interest-only, equity release and retirement borrowing?
A. We know that tax changes have impacted buy-to-let transaction growth. But there is still plenty of opportunity for brokers to support buy-to-let landlords with great remortgage deals. Lending into later life and retirement borrowing are areas of potential growth in the future. Society changes, and we have to change to meet the needs of our customers. Home-ownership is falling and we need to find new ways to support growth. Lenders want to lend, and collectively we have to help customers understand that they can borrow and meet their home-ownership aspirations.
Q. New entrants are building market share rapidly. How will that affect mortgage distribution?
A. The market is growing, and that has allowed the new entrants to grow successfully. More entrants means more customer choice and greater competition, which is good for the customer. But that also means that customers will seek advice and support to make the right decision. New entrants don’t generally have access to legacy customer bases or large branch networks and that leads them to use the intermediary channel to grow, which is good for the industry.