Yesterday, Mortgage Advice Bureau (MAB) launched an advisory firm in partnership with mutual Penrith Building Society to offer its Appointed Representatives all the services received by MAB network members.
Mortgage Solutions: How did the partnership between Mortgage Advice Bureau (MAB) and Penrith Building Society come about?
Peter Brodnicki: No approach was made by either party. We didn’t knock on the door and say to Penrith: “This is what you want to do…” It just came out of general business conversations. We work closely with all our lenders. We ask about them and they ask about us. It’s all about individual needs.
Penrith is a good society and is very clear about what it wants to achieve. Everyone will have their views on how they want to go about it, different thoughts about the future, and will want to make their own decisions. Where possible, we’ll try to tailor our proposition to a way that culturally fits them.
How will the partnership profit split work?
I don’t want to go into too much detail, as profit splits are specific to each firm, and it’s not really appropriate for us to discuss commercial terms with any of our ARs. In a way, this new partnership is just like a normal network charge, there’s no difference, so it’s based on the size of the business and, depending on each relationship, we put together a set of personal charges.
The type of building societies we’d work with would be small and medium-sized, with 75 percent intermediaries, so they’ve got to think about the cost of running their own financial services, the investment required and the bandwidth of resources required.
In a society like Penrith, things like knowledge levels, technology training and oversight are spread over fewer resources. So they say to themselves: “Do we want to do all this ourselves? Or is it easier to plug and play?” Each lender is very different about how they set these things up and when the timing is right. A partnership with MAB is just another option for them.
Are you talking to other lenders about forming similar partnerships?
We have ongoing conversations with lenders all the time. Sometimes you come across lenders and talk about their plans and it might lead to a conversation about something like this. We have specialist propositions for different sectors of the market, whether it’s estate agency, new build etc.
Each lender is unique, we’ll listen to their needs and if we can help then fantastic. They all want different things. For example, the Nottingham Building Society have decided to go whole of market. Penrith have decided to stay specifically Penrith. Businesses can choose one then move to another.
Just like working with ARs, you need to listen to them and understand each firm. Then you can see if you can help them achieve their plans in a cost effective and secure way.
Will this partnership be run from one office or will there be several around the region?
That’s all down to Penrith and will depend how they acquire their direct business. They do quite a bit over the phone, like a lot of lenders now.
Do you think this kind of partnership will become a popular model?
This is purely about how a lender wants to consider how they manage their direct business. Smaller and medium-sized building societies are heavily intermediaried. We’re talking about their direct business being the minority element in most cases. It’s just about how a lender wants to run its own advice arm.
Can you tell us about the structures of investment in the partnership?
There’s no investment involved. Lenders have to make their own decisions about how they invest their resources. They have to compare the cost of doing it externally with the benefits of working with a partner like MAB. We agree commercial terms with any AR and we will do that with any lender.