In LSL’s financial report, which came out earlier today, the number of network firms fell by 5% to 1,084, which it said was due to it reducing its number of protection-only businesses.
Primis advisers who sell mortgage and protection came to 2,245 in the period, a drop from 2,312 last year, and 392 advisers sell only protection and general insurance, a decline from 535 in the same period last year.
Speaking to this publication, Adam Castleton (pictured), group chief executive of LSL, explained: “Where we’d like to focus more is where we have what we call composite firms that are providing both mortgage and protection advice. We like to work with, and what we think of as our heartland… the smaller firms with the two or three advisers. Often, they’re sort of owner-managed and advised businesses, and we like the deep relationships we have with those firms.”
Castleton said it liked protection when it is “attached to the mortgage”, as the “persistency is generally higher”.
He continued on to say it was focused on the “productivity” of advisers and their “ability to provide services”, which would come through its CRM system, but that it would be looking to grow its adviser numbers in the second half of next year once the CRM system is embedded.
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Increased regulation will benefit larger operators
Castleton added that increased regulatory focus would consolidate demand towards larger operators, and this was the case across its divisions.
Within its estate agency business, the upcoming Renters’ Rights Bill was encouraging landlords to opt for a “managed approach” due to increased complexity.
He noted that from a financial services division perspective, the regulator has “been more interested in networks”, pointing to Consumer Duty and the appointed representative (AR) regime coming under scrutiny.
“We’re able to deal with that [increased regulatory focus] better than smaller players because we have invested in governance and compliance, whereas others, perhaps who are privately owned, don’t do that.
“So over time, as regulation come[s] in, it certainly plays to the larger players, whether they’re consolidating or not, because we can invest in what’s required, and secondly, because we’ve got the deep domain knowledge over so many years, we’ve got that trusted relationship where we can give support,” he said.
Refinance activity expected to be strong
Castleton said that due to two-year fixed rates that came off the back of the mini Budget and five-year fixed rates secured during the pandemic, there was a “spike of refinancing” in the first half of the year.
He noted that July was the strongest refinancing month so far this year, and in the second half of the year, remortgages are expected to be up 45% or so, continuing the strong refinance trend.
When asked if the upcoming Autumn Budget was having any impact on business, Castleton said it wasn’t seeing a fall in activity in sales agreed, instructions in estate agency, property fall-throughs or a fall in surveying jobs.
Primis tech upgrade will boost adviser productivity by up to 20%
On the Primis side, he said it was planning on piloting the new CRM system later this year and aimed for that to be rolled out completely across the network in the first half of next year.
“We expect to see benefits that in productivity should allow advisers to do a mortgage case more quickly, we estimate maybe 10% or 20% quicker than they’re doing them today,” he noted.
Castleton added that another feature it was looking at was integrating protection platforms so the system would offer an automatic fact find and quote for protection on a mortgage application.
He said this would help productivity but also improve product penetration.
Protection accounts for around 28-30% of financial services division revenue.
