Graves also believes LSL’s purchase of Personal Touch Financial Services shows the network advice model is still in good health.
However, he raised some concern about the level of fees still being charged within the master broker sector and noted that the sector needed to be better at self-policing these issues.
Graves spoke to Mortgage Solutions on the release of the firms’ lending figures for 2017, which saw the highest combined mortgage volumes since 2008 for the network and mortgage club.
Target product transfers
Sesame and PMS delivered £37.5bn of mortgage completions in 2017, a £2.9bn increase on the previous year.
“It’s gone as well as it possibly could have done but that doesn’t happen overnight, it’s good momentum that builds up,” he said.
However, with a flat lending market predicted for 2018, Graves said brokers should be targeting the product transfer sector to boost their business.
“In general terms brokers do 80% of mortgage, remortgage and buy-to-let business, with lenders doing approximately 20% direct,” he said.
“On product transfers it’s the other way around but I think we will see shift in that through 2018 as brokers change their processes.
“We have seen that shift start in Q4 of 2017 and the product transfers we saw advisers doing were on top of what they were already doing.
“So if brokers focus on looking after existing clients then I see no reason it shouldn’t double to 40% of the product transfer market by the end of this year,” he added.
Level playing field
Lenders have already shown signs that they will become more pro-active and competitive in seeking to retain customers themselves in this evolving environment.
In general Graves was not too concerned about this practice, noting that the only winner would be the customer, but he did demand a level playing field from lenders in what they offer to broker clients.
“What matters to me is that it’s a level playing field and the benefits available are the same because the most important thing is that customer gets treated fairly,” he said.
“If a customer can get a different deal through the lender than broker that’s an inconsistency and that’s not a fair outcome.”
Vote of confidence
One of the stories of the last 12 months has been the debate between the directly authorised and appointed representative adviser market.
With LSL purchasing Personal Touch Financial Services last week this has been a further notable development. However, Graves believes this activity shows there is still a strong demand for the network model.
“I don’t think the deal changes anything apart from restricting choice a little,” he said.
“I think the networks are in a very healthy position and this should be taken as a vote of confidence and a good sign that there’s a future for the network model,” he added.
Industry must self-police
Fees charged by master brokers in the specialist lending sector, specifically the second charge market, have once again become a cause for concern within the market, with the FCA looking on with interest.
Graves has some concerns in this regard but wants the industry to get its own house in order without the regulator needing to crack down.
“The fee for the job should be in a band but the band in that space seems rather wide,” he said.
“We have our own fee banding in place, but I do accept that it probably needs the industry self-policing, it shouldn’t need the FCA to come in and do it.”
And he added that it was “healthy” to debate and discuss these issues in public and in the media to improve the sector.
“We should encourage debate to keep making the industry better,” Graves continued.
“I don’t see it as something that wasn’t working so we don’t need a knee jerk reaction, but we need to keep working on it – we’ve got to keep improving the processes and systems.”
Entrepreneurial brokers
Sesame PMS also revealed significant increases in protection and general insurance business last year, as Graves noted the firms’ adviser force “showed their entrepreneurial side”.
Protection annual premium income (API) through rose by 15% to £63.7m while general insurance policies written grew by 13%.
Don’t give tax advice
Graves also took the opportunity to issue a warning for brokers involved in the buy-to-let market – “don’t stray in to tax advice”.
With training alongside lenders the introduction of the portfolio lending rules in the final quarter of 2017 had not been a problem.
“The only thing we have to get across is brokers have to fully understand they can’t offer tax advice,” he said.
“The training has educated them where advice starts and stops and that if there’s any customer confusion they need to go somewhere for tax advice.
“That’s the bit they have to get used to and then the customer can tell them which way to do the transaction,” he added.
