QWhy have you recently launched Godiva? What benefits will there be to selling products through Godiva as opposed to Coventry Building Society?

Setting up Godiva Mortgages is a natural progression for us. The Coventry is already recognised as a serious player in the ­intermediary market. We have innovative and competitive products delivered through an award-winning service proposition based on dedicated support teams and an accessible and effective website.

Launching Godiva Mortgages as a dedicated business for our specialist lending shows our commitment both to the intermediary market and specialist sectors. We know that intermediaries are keen to do more business with us across a broader range of products. It will give us scope for growth and further innovation, to extend our range of products and to focus on the needs of intermediaries and their clients.

QCan you reassure intermediaries that Godiva will not be used as an opportunity to offer consumers better deals through the direct branch network? What plans are there to continue supporting the intermediary market?

One of our pledges through Godiva Mortgages is that there will be no differential pricing between channels and all direct mortgage products will be available to intermediaries. Our strategy is to be fair to all our customers. Intermediaries will continue to get access to all our products – both from Godiva Mortgages and Coventry Building Society. Likewise, members who wish to buy specialist products direct from the Coventry will be able to do so.

We believe the Coventry has established a reputation for excellent products and services in the intermediary market and we want to combine the flexibility and growth potential of the new subsidiary with our existing strengths – for the benefit of mortgage introducers. We already obtain more than 70% of our mortgage business from intermediaries so the importance of this channel is obvious. Launching Godiva Mortgages as a dedicated specialist lender for intermediaries is a further demonstration of our commitment to them.

QWhat are the benefits to mutuality? Do you think its principles will become diluted if the proposed Nationwide and Portman merger creates a ‘super’ building society?

As a mutual, the Coventry has a clear and consistent strategy – to be financially strong, to grow the organisation and to treat customers fairly. Our total focus is on customers not shareholders. TLC, not plc.

Although Godiva Mortgages is a non-member organisation, the six pledges that we have announced demonstrate that intermediaries and their clients can be assured of the same brand values they have come to expect from the Coventry.

The proposed Nationwide and Portman merger does not change this. We are happy to have a large building society in the sector, which can only reinforce the value that mutuals offer in the financial services industry.

QYou have previously said that you are firm in your intention not to pay retention procuration fees. Do you think this will leave you severely disadvantaged against some of your competitors, particularly the larger players?

Another of our pledges is that all products are available to new and existing borrowers. Generally, those lenders who pay retention procuration fees have a specific range of transfer products, which may not offer as good value as a new business product. We believe that to treat customers fairly, all products should be available to them. We understand why many lenders do this, but our products and policies provide us with good retention, which has not been adversely affected following the change in practice from some lenders. Of course, we will continue to monitor this carefully, but have no intention of changing our approach.

QAlliance & Leicester has recently launched PlusMortgage, their 100%+ product, following BM Solutions’ Mortgage Plus product in November. Coventry is already well known for its 100%+ products. Is the Coventry worried about losing market share to these new entrants?

It is correct to say the Coventry has been well established in this market for several years with its range of MOREgage products. We are delighted with the levels of business we achieve in the 100%+ market and expect to see continued growth in this area. Last year, the demand for our MOREgage product was so high that we were forced to withdraw from the market for a number of months, as we had reached our capacity for such products as a building society. That was a frustrating problem which we will not face in the future, by offering the MOREgage range through Godiva Mortgages.

We welcome Alliance & Leicester as a new entrant to this specialist lending area and believe it can only add strength to the market place.

QIn which lending sectors is Coventry currently strongest, and which areas of the business are you looking to grow?

One of the strengths of the Coventry and Godiva Mortgages is the breadth of the mortgage portfolio. We are ambitious and will continue to develop highly competitive products across the range.

Our range of flexible residential products continues to be extremely popular, and in addition, we do very well in the buy-to-let market and expect to see this continue through 2007. Our MOREgage product is well established and as one of the few providers of 100%+ secured and unsecured lending products, through Godiva Mortgages, we expect to see substantial growth in this area.

We will continue to make inroads in self-certification and the credit impaired sector and will be looking at expanding our range of products and potentially moving into one or two new areas. By the end of the year, we expect Godiva Mortgages will account for almost half of our lending in intermediary markets. n

If you have any questions for a lender who you think should undergo the Stress Test, please email the editor, andrea.tryphonides@incisivemedia.com