Lender service and the buy-to-let market were key points of discussion, but perhaps most fiercely debated of all were procuration fees and lenders’ willingness (or lack of) to pay brokers for retention business.
“Lack of common sense” was the phrase given by one attendee to describe the current state of lender service; a view which seemed to be shared by most brokers around the table. Underwriting and communication with business development managers (BDMs) were picked out as areas lenders drastically needed to address.
Enabling direct communication with underwriters so advisers can better understand a decline was one such way lenders could improve their service, attendees said.
“That’s where things get lost in translation,” one explained. “An underwriter sends an email out and we have to decipher exactly what the lender is saying it wants. That causes great problems and you end up producing something that isn’t what they want, at the end of the day.”
Another echoed this sentiment, but said the responsibility to challenge decisions laid elsewhere: “Communication directly with an underwriter is good but I place a lot of my business with the lender depending on the BDM. You want someone to take control of your case.”
Trust in a lender and their ability to secure a mortgage offer is established through the BDM, brokers agreed.
In several cases, brokers cited their unwillingness to place a case through a certain lender if there had been inconsistency in service support.
“We gave [one lender] something like £23m one year in completions and then it left us without a BDM for nine months,” was one such comment. “A different lender changed its account manager around three or four times in a year which meant we didn’t have an account manager for several months. That meant we didn’t send them any business because we couldn’t rely on the information we got from the call centre.”
Paying to retain
On the issue of keeping brokers on side, the group turned to address retention fees. Like most of the broker industry, attendees did not hold back on scathing critiques of lenders that were failing to reward brokers with commission for product transfers.
One participant noted that a disparity in the remortgaging deals on offer from lenders compared to those through intermediaries meant it made little sense for customers to opt for the latter route.
“I have turned away, unfortunately, 75% of remortgage business this year because of clients being offered a deal by their existing lender,” an attendee explained. “I tell the client; ‘you’re going to save £2 a month if you change it with me, but you’ve got to pay me a fee’. That makes it unfeasible, so you tell them to stick with their existing lender.
“We give a full advice process and they retain that client on the back of our advice, so why aren’t some lenders giving us anything for it?” he asked.
The model for lenders to follow, brokers said, was the one offered by Halifax. Brokers have access to the lender’s system and can see all the customer’s details, including the balance of the mortgage, making it straightforward for brokers to keep clients on with Halifax if suited.
‘The more difficult for them, the better for us’
Supper Club members were asked about activity levels in buy-to-let business since the market was hit by varying plans to change how investors and their portfolios are taxed and regulated.
But brokers appeared not to be swayed: “The harder it is for the customer to source themselves, the better it is for us to do business,” one attendee highlighted.
However, placing existing buy-to-let customers onto a remortgage deal was proving difficult for some advisers, as tighter underwriting standards meant rental calculations were steeper than they were two years ago.
Brokers were also critical of changes brought about by the Mortgage Credit Directive, which redefined how lenders must assess buy-to-let customers through the creation of a ‘consumer’ buy-to-let category.
“It’s a load of nonsense, the two definitions, full stop,” an adviser said. “If the intention to retain the property for long-term growth and profit, it’s a business buy to let. And every lender should have that attitude.”
Another agreed: “If a homeowner had the property on the market and to move they’re now remortgaging it on to a buy to let, I could accept the point. But just because I’ve lived in it, it doesn’t make it consumer.”
As the evening ended, it was evident from the main themes that emerged what brokers were demanding from their lender relationships; honesty, efficiency and a common-sense approach to doing business.
One participant summarised by adding: “When it’s tight, you’re going to go to the lender that you can trust.”
A huge thank you to all our participants for a fantastic night and Accord Mortgages, our host.