QAre there any advantages for brokers in dealing with a Scottish building society as opposed to English building societies?

I do not think there are any particular advantages or disadvantages of dealing with a firm based on its geography.

However, as more than two thirds of our lending is in Scotland, we feel we have an edge in this market. This is because we are in tune both with developments north of the border as well as the different house buying process.

It would appear that one of the effects of the credit crunch has been that people are now more discerning about who they choose to deal with.

Certainly, Building Societies Association (BSA) figures mirror our own increase in deposits and lending, so building societies are seen as a safer haven at the moment. And if you believe the stereotypical image of canny, prudent Scots, then this may be a factor.

Sponsored

Conversations you need to have with landlords before the Renters’ Rights Act

Sponsored by BM Solutions

QYou recently confirmed you launched into the equity release market. How big do you think this market will become? What share will you be looking for?

The launch is planned for early May. Full details of the move were released at the Equity Release Roadshow in Glasgow on 22 April [see Mortgage Solutions, page 8].

We believe the equity release market has great untapped potential; in particular, the work Safe Home Income Plans (SHIP) does will help build confidence with both advisors and customers alike.

Having more providers who offer more choice, more security and better value will certainly help leverage this potential and we all have an onus to educate advisers to that potential.

In addition, Scotland is definitely punching under its weight. According to SHIP, Scotland currently represents 10% of the UK population but only about 5% of the equity release plans sold in 2007. We believe that entry by the largest building society in Scotland should help rectify this situation.

However, our offering is UK-wide, and so we hope to join in with the new and existing providers in helping to build this market further.

QUntil recently, you offered up to 110% loan-to-value (LTV) to professionals and graduates in Scotland. Why has this been withdrawn? Do you foresee a re-entry into this market?

The reason was more to do with our becoming one of only a few lenders left in this market rather than any risk exposure.

Our position caused the society to receive five times more applications than we had expected, and that in turn meant our overall service levels that we provide to intermediaries was deteriorating.

Therefore, in order to get these back on track we decided to temporarily withdraw from this market.

However, we have not yet achieved the 2008 targets for this area, so we will look at coming back into this market in the second half of the year, though it will probably be on a more selective basis through key introducers. That is, of course, unless the markets change for the worse again.

QDoes Dunfermline favour the aggregator model of clubs and networks rather than the directly authorised market? If so, why?

The simple answer is no. Our experience is that we receive good quality business from firms in both models, so we have no bias towards either.

We tend to operate in all markets in a quality-controlled manner based on mutually beneficial partnerships. The fact that the firms we deal with are appointed representatives or directly authorised has no real bearing on our approach.

QFollowing the liquidity squeeze, there has been a flight to quality, with many building societies seeing increases in business. Have you seen a substantial increase in applications? Do you have systems in place to maintain the quality of your service to intermediaries?

We have seen an increase in new business on both sides of the balance sheet. The challenge that societies face in these situations is about delivering a quality of service, which we at Dunfermline have found difficult lately.

The changes we made to our lending criteria, alongside increasing our partnership approach with some of our key providers and rolling out our online application process, will hopefully help us continue to get the balance right between good service, good quality lending and strong relationships.

QYou attributed much of your growth last year to your investment in technology. What improvements, if any, have you seen as a result of this investment? Can brokers expect to see any further improvements?

We are making this year about rolling out our own online system. We are also focusing on making brokers aware they can submit cases through the Mortgage Trading Exchange (MTE), as well.

This will help underpin and deliver 40% growth targets through the intermediary channel and make the products and services even more accessible to intermediaries throughout the UK.

While there are a couple of other areas Dunfermline is looking at, the key challenge this year is to offer good quality products to intermediaries and to look to satisfy them and their clients’ needs.

While we credit score and affordability check applications, each one continues to be underwritten manually, which we believe will be even more of a key differentiator in the future. n