What is your experience in the mortgage market?
I joined NatWest as a 17-year old, printing cheque books. Seven years later, I joined TSB as a branch manager, where I was involved in the Lloyds merger. I eventually moved into life and pensions and worked on the Scottish Widows merger. I then left to become a project manager for the New World mortgage outlet for Commonwealth Bank of Australia. I was then asked to become director of Scottish Life Mortgages, which is where I am now.
What’s Scottish Life Mortgages’ history?
Scottish Life Home Loans had been going for a number of years and remained the only life assurance company that stayed in the mortgage market when everybody else pulled out a few years back. It then swapped to its present title, Scottish Life Mortgages, two years ago. The intention was to develop existing relationships with Scottish Life’s intermediaries and it has since developed into a packaging service. It has around 4,000 registered brokers. Looking forward, we are focusing on building relationships with people who can give us quality volume business.
Do you think packagers should be regulated?
From my point of view, I have not come across many packagers that purely do paperwork. If an introducer sent some business that did not fit a lender’s criteria, they would not be handed it back and told to go elsewhere. We turn around and say ‘it doesn’t fit here, but here’s another lender’. In my opinion, the whole packaging business should be regulated. In essence, even if it is at the back-end, we represent the customer in processing their business, and, if regulation is for consumer protection, then service comes into that as well. From my perspective, unless the business is segmented, if you are doing any front-end work, then it should be regulated.
How is developing technology likely to affect the packaging sector?
The key issue at the moment is the acceptance of electronic signatures, which will allow fully downloaded applications. We are in discussions with several lenders on filtering direct downloads to the lender. Introducers will not directly download to the lender because lenders don’t want their systems bunged up with unnecessary data. A packager would act as the filter between the two, with a common trading platform. The other side of the coin is that this means the packagers would perform a form of outsourced processing. Lenders going into meltdown ‘ because of such high business volumes at this time of year ‘ would not happen anymore.
What do you think of the development of through lending and correspondent lending?
We have not gone down that route. In the last couple of weeks I’ve heard comments on how it will all stack up in the future, as far as some legal issues are concerned. Because of the amount of business around at the moment, we feel there is enough for us to do with the market in its present state. However, in the future I think there will be more joint branding of products, though not necessarily through correspondent lending. I can see a place for a form of dual branding that is transparent, I would not want to just brand a product as ours and then sell it on as a book in a few months. Through and correspondent lending are a consideration for the future, but because it is still in its early stages, I would rather watch and see how it pans out and see what legal implications are going to come out of it, before jumping on any band wagon.
So, what does the future hold for packagers?
Numerous networks are approaching us now, obviously because of CP121. We have just signed a deal with a network that makes Scottish Life Mortgages its exclusive packager. This type of deal means packagers and networks can combine joint technologies and joint marketing to the benefit of the networks’ introducers. From a compliance point of view, because of the implications of where regulation could go for packagers, we have employed a compliance expert to give us a full review of where we are now and how we can move forward.
When it comes to regulation they are not going to re-invent the wheel. My perception is that it will be very much along the lines of life and pensions. However, if you look back a few years to when life and pensions became regulated, it is interesting how many people dropped out of the industry. It will happen in the mortgage industry and will happen with packagers as well. From a packager’s point of view, the sheer cost element of the requirements that could come out of regulation will have an impact.