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The wind is blowing in the broker’s direction – Stonebridge

by: Richard Adams, managing director of Stonebridge Group
  • 15/03/2018
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The wind is blowing in the broker’s direction – Stonebridge
Following from the UK Finance figures on lending figures in 2017, Stonebridge managing director Richard Adams writes on what it means for the relationship between lenders and intermediaries in the year ahead.

The latest set of mortgage lending statistics always make for interesting reading – UK Finance’s final take on 2017 revealed a gross lending amount of £256.1bn for the year, which despite all the wailing and gnashing of teeth was actually a 4% increase on the previous year.

From those figures, which included over £20bn of gross lending in what many deem the quietest of months, December, you might suggest there would be a greater degree of optimism around what 2018 would bring, but I have to admit if that’s the case then I’ve been hard-pressed to find it. Uncertainty abounds.

There may well be good reasons for this. UK Finance also pointed out that in the last three months of 2017 ‘approval activity’ was 3% down on the same quarter in 2016, so perhaps we’re right to think more pessimistically about this year given we have not entered this 12-month period with the same momentum as this time last year.

 

Where the wind blows

That said, there has been some news recently which suggests the intermediary part of the market remains in fine fettle, and that if anything, rather than falling back due to lenders seeking to recoup more business direct, the wind is actually blowing harder in the intermediary’s direction.

The Co-op’s recent decision to only accept new business via intermediaries through its Platform brand is one such indicator, as is perhaps HSBC’s recent mortgage lending figures which seem to show over £20bn of lending in 2017, increasing its share of the UK market.

It puts this down to ‘…the expanded use of broker relationships’ which has clearly had a major impact, and while there may be many within HSBC who might congratulate themselves on moving away from their direct-only model, the numbers appear to suggest that this should have been done a long time ago. Sometimes there’s very good reasons why you should be in a minority, and sometimes there’s not.

 

Power

However, from an adviser perspective, what this does show is the value you can generate from lenders and the rather powerful position this should give our entire sector, especially when it comes to securing better terms, better access to services, and better systems and processes.

I won’t go as far as to say that all lenders working on building state-of-the art technology to drag in more business direct, should stop immediately, but I would like to think there will be a prioritisation of what works, who deserves better tech, and where the biggest gains are likely to be made. I’d suggest that answering this truthfully will lead to be more concentration on their intermediary relationships, rather than less.

 

Adding zeroes

It might seem the right thing to do to have an all bells and whistle tech set-up for direct-to-consumer business but when it’s only bringing in a very small part of your overall lending volumes, is it a) cost-effective and b) worth your while.

You can guarantee that those lenders investing in their support for advisers, be that the systems and processes, the tech, BDM support, products, procuration fee levels, you name it, are going to reap the benefits of a £250bn-plus market, which is likely to add some zeroes when we finally get to see lenders’ product transfer numbers, which are not currently counted in UK Finance’s figures.

Clearly, consumers want advice and as advisers we need to work on providing a better customer journey for them, but so must lenders invest and resource effectively the intermediary journey.

There is enough competition out there for advisers to look elsewhere and it will be those lenders who ensure advisers don’t need to do this, who I believe will be the big winners.

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