Virgin Money’s recent decision to spend a not (I suspect) insignificant sum of its marketing and advertising budget actively urging customers to use a broker, rather than come to them direct, appears to go not just against the grain of recent tradition but to discard with that particular piece of industry ‘wood’ altogether.
I’m being somewhat flippant of course because there are large numbers of lenders who only deal with intermediaries and are nothing but supportive of the community.
However, what perhaps makes this different, is that we have a lender which also offers its products direct, going out to the consumer and saying, ‘Don’t come to us direct, use a broker’. Regardless of the fact that by using the aforementioned broker they may not receive the business. Some might even call this turkeys voting for Christmas, but to my mind this is a well thought-out and long-term focused strategy that puts the consumer’s interest at the heart of the mortgage decision.
This appears to be pro-adviser and altruistic on an unprecedented scale and it may need some further evaluation by advisers, particularly given the sometimes fraught relationship that has often existed between the two parties. Dual pricing, anyone?
Even now, when intermediary levels of business are much stronger than they have been for some time, there are still plenty of bones of contention between advisers and certain lenders in the marketplace. The issue of procuration fees for retained business is one that some lenders will still not countenance, while we are constantly told that those major players, who would like to see the intermediary share of business paired back, are focusing on their technology offering in order to do just that.
So the deeply sceptical amongst us might well think this Virgin Money campaign is being done for ulterior motives – lo and behold, I don’t agree, indeed I think the motives are quite plain to see.
It’s an overwhelmingly positive move for a number of reasons. Firstly, of course, it cements Virgin Money’s relationship with the broker community and tells them how highly they figure in its plans. Secondly, it’s not just saying ‘Use a broker…’, it’s also saying, ‘…and, if you don’t know one, you can find their details here’ by sending them to the findmeabroker.co.uk website. Thirdly, it’s encouraging consumers to shop around – it’s undermining the ‘elephant in the room’ that many lenders have refused to let on about for years namely, come to us and you only get access to our products, when there’s actually a whole market out there to be accessed through an adviser.
This strategy feels different because it is. It also seems like a significant step forward, given it comes from a mainstream player who might well have opted to advertise its products direct to consumers without mentioning the adviser at all.
Perhaps this is a game-changer? Before he returned to his home territory, Steve Weston, former CEO at Barclays, talked a great deal about more collaborative working between retail banks and the independent, intermediary community. This could be one of those potential developments which would move the relationship between banks, consumers and intermediaries into a much more aligned and interdependent place, akin to what currently happens in Australia.
Virgin’s move is clearly not just talk but perhaps the first in a series of game-changing steps.
