Spending more than 27 years in the financial services sector is no easy feat, but Mark Chilton, chief executive of Purely Mortgages, is an experienced campaigner.
Chilton obtained a physics degree from Exeter University, while qualifying in parallel as a materials engineer, in 1974. It was this unusual duality that helped fund his university education. Chilton explains: “There were a number of construction projects underway in the UK at the time and most university students worked as labourers during their university holidays, but because I had the right scientific and engineering background, I got a job as a materials engineer. It was a fascinating job, which allowed me to look at the underlying structural design of projects.”
Keen to take his experience to the next level, Chilton contemplated a career within the engineering sector, but was unwilling to make the long distance move to the Middle East, where the bulk of larger engineering projects were underway.
After deciding against this, Chilton chose to take his career in another direction. He says: “Company representatives were doing the university milk rounds and at this stage I was starting to get a little terrified. My decision was made when I was offered a position working for PricewaterhouseCoopers (PwC) on a fast-track graduate accountancy scheme. It seemed like a reasonably good idea, as it was a career that offered the foundations to go on and do other things.”
This proved to be true as Chilton went on to have a diverse career at PwC, where he had the opportunity to run a global oil company, department store and finance house. He says: “I did a lot of non-classical work during my time at PwC, but I was told if I wanted to become a partner I would have to go back to doing more conventional work and quite simply, I did not fancy the idea.”
On the move
After 10 years, Chilton left to join Lloyd’s broker Harrison & Horncastle as finance director, where he gained an insight into the insurance market. “It seemed like a natural progression to move into the Lloyd’s market as my family had always worked within this sector,” he says.
Chilton made his next move in 1987, to what would be the beginning of a successful career within the mortgage industry.
Chilton played a key role in the launch of First Mortgage Securities (FMS) – one of a new breed of centralised lenders set up using securitisation finance. Responsible for both business development and risk management, he pioneered a number of new initiatives, including the introduction of derivative-based mortgages, branded distribution of mortgages via life assurers, comprehensive credit insurance for securitisation issues, through lending whereby loans were originated direct onto other lenders’ balance sheets and the first telephone-based mortgage service in the UK.
Chilton believes FMS – alongside other prime mortgage lenders, including National Home Loans (which now exists as Paragon) and Household Mortgage Corporation – were responsible for shaping the mainstream mortgage industry into what it is today.
Period of change
Chilton says: “Industries go through periods of change and we were a typical example of this. Everything we did has been adopted by the mainstream market even though these original companies do not exist today due to the housing crash in 1990.”
Chilton moved to Savills in 1997, where, as chief executive, he launched a greenfield operation in retail financial services – Savills Private Finance. He developed the business to a market leading position at the high end of the mortgage advisory sector – with loans arranged in 2001 exceeding £1bn, and a team of 80 staff operating from eight locations in the UK. The business operations included commercial debt placement, holistic financial planning and an insurance brokerage. In addition, he was responsible for Savills’ property fund management activities.
Chilton says: “We had this brand name and we grew it aggressively and now Savills has become one the most profitable mortgage intermediaries in the market. This is because it was established as a business with brilliant people and to be honest it has barely shifted from the model that I created.”
However, after a spate of difficulties with the board over the future direction of the business, Chilton parted company with Savills in 2001.
The experience left Chilton mistrustful of the corporate ethos and driven to strike out on his own. Over the next two years, he developed his own mortgage broker proposition and in 2004 launched Purely Mortgages – a remortgage-led, fee-free, telephone-based brokerage.
He says: “I have been involved in two business start-ups, both of which have been very successful, but I did not make a huge amount of money on either of these. During my time at Savills, it became clear that there was a gap in the mass market to take advantage of all the technological changes that were occurring and use these to accommodate people’s behavioural changes in relation to mortgages. I invested two years of my life developing Purely Mortgages and my hard work can be seen today.
“The market is tough at the moment, but it will be strongest next year for simple rate-led remortgaging. The country has bred a pattern of serial remortgaging and the Purely Mortgages proposition fits that market need very well. I am not talking about the hyper-elite market where every circumstance requires face-to-face broking, I am talking about 90% of the population that are holding out to get the cheapest rate available.”
Today, Purely Mortgages employs more than 30 advisers, and Chilton has outlined an aggressive expansion plan, which he hopes will see his firm double in size over the next couple of months, and move into the specialist broking sector. “In contrast to L&C, who I view as our main competitor, I am taking Purely into the sub-prime sector, where it is almost unique to have a zero-fee proposition. This year is going to be the year of the fee-free broker and it is going to be an unsustainable proposition for a broker to charge fees,” he says.
Chilton believes the Financial Services Authority (FSA) will help to stamp out some of the practices in the sub-prime market where some brokers continue to be paid up to 3% for distribution while charging a 5% arrangement fee.
He also believes that as the sub-prime market incorporates sophisticated technology, and offers greater procuration fees for business submitted online, the need for packagers will decline.
He concludes: “Our best ally has been the FSA and those that are used to a more formulaic approach will be able to increase their share of intermediation in the market.
“It is important that the intermediary market prospers and this will only happen through the concentration of quality distribution. If a broker is good they will survive, if they are not, then they will go to the wall.”
Chilton claims to have fully embraced the regulatory environment and looks forward to taking his company to the next stage of development over the coming year.
