Protection underwriting tightening but ‘CI and IP booming’ – iVENT 2020
Speaking at the Mortgage Administrator Ivent, MAB protection proposition director Andy Walton explained that some cases were taking longer due to insurers and GPs being slower.
However, the firm has seen an 80 per cent increase in income protection (IP) sales with the critical illness market buoyant too.
Walton also emphasised the key role administrators played in getting cases through, this included a major campaign from the firm to revisit customers who missed getting policies put in trust.
Pressure on administrators
Walton noted there was quite a lot of pressure on administrators and sales support, mainly due to mortgages becoming “increasingly complicated and more difficult to get through and that’s taking up quite a bit of extra time.”
“In protection that’s also taking longer to administer and get on the books,” he said.
“It’s mainly because of GPs [where] some of them have slowed down dramatically, although there are occasions where they’ve speeded up.
“But there’s quite a bit of pressure on the world of administration at the minute.”
Regarding insurers and underwriting specifically, Walton acknowledged insurers have started asking more questions in relation to Covid-19 given its emergence.
“New questions have been added which has added a great deal of complexity as different providers are asking different questions, so certain cases are being delayed or postponed,” he continued.
“IP is trickier to get on the books because that’s the highest risk… so there has been some tightening there.
“What we’re hoping is that as this eventually gets under control that the underwriting will get easier.
“It hasn’t stopped business, we’re still writing thousands of policies a month, the vast majority still go on risk and from that point of view it is still business as usual, it’s just those small number of cases which can trip up on these extra Covid-19 questions.”
Walton also said the increased protection business conducted by MAB was a sign of improvements within the market for customers.
“Our protection business has moved up dramatically. On IP we’re writing 80 per cent more than we did a few years ago and it accounts for nearly 30 per cent of our business, so there’s definite moves to look at products outside typical life insurance,” he said.
“CI is booming, IP is definitely booming. Is there more we can do? Absolutely, there’s still too many mortgages which aren’t protected, but we’re going in the right direction.”
MAB analyses the importance of protecting borrowers at The Mortgage Administrator Ivent
Andy Walton, protection proposition director at MAB, (pictured) will host a video presentation at the online event focusing on the protection and general insurance sectors.
He will discuss why is it important, particularly now, that every customer receives protection advice and why some customers are choosing not to take it.
Walton will also examine the role of administrators and support teams in making sure that the customer has adequate cover.
This will include the critical components of customer communication, reminders and liaison with your adviser colleagues to ensure that this opportunity and customer duty of care is not missed.
Register for free
The online Ivent takes place on 23 September and is specifically tailored towards mortgage administrators and paraplanners and this year includes a special focus on the buy-to-let sector.
Attendees will be able to access content, visit sponsor stands, meet and chat with fellow delegates and exhibitors, and send live message questions to speakers.
The buy-to-let sector focus will help attendees to understand the challenges and opportunities landlord clients are facing and how this impacts their strategies for buy-to-let business.
To register for free and find out more information visit the event website: https://www.mortgagesolutions.co.uk/events/mortgage-administrator-ivent/?pfat=08b4ae5e696e4b3784a43e2200380937
The Melton partners with MAB to give mortgage advice
MMBS Services, an advisory subsidiary of the Melton Group, will be trading as Mortgage Advice Bureau and using the network’s services, systems support and regulatory approval.
The service will initially be operated from its head office in Melton Mowbray.
Simon Taylor (pictured), chief executive of the Melton, said: “We already work very closely with our network of intermediaries so that the majority of our customers can benefit from the Melton’s innovative mortgage products.
“Whilst we remain committed to supporting our broker network, this new partnership with MAB will allow us to reach even more customers and help them to find the right mortgage to achieve their home ownership goals.”
Peter Brodnicki, chief executive of MAB, added, “This is the first time we’ve partnered with a lender to support our strategy of making it easy for customers to receive quality advice in a multitude of ways – face-to-face, over the telephone or digitally.
“We share the same synergy with the Melton where quality advice and first-class customer service is always at the heart of everything we do.”
Lenders ask for brokers’ support as stamp duty cut set to increase app times
As a result, lenders are expecting times to offer to lengthen and so among other things, are asking brokers not to make routine update calls which can be a “significant drain” on resources.
The mortgage market has rebounded strongly since restrictions around housing moves were lifted, but lenders across the industry are still facing limitations on processing capacity as large numbers of staff are still only able to work from home.
This has already been highlighted in the high loan to value (LTV) sector where several lenders have introduced limited editions of products to ensure they can meet supply and service levels.
Mortgage Solutions reported that brokers had been contacted by clients within minutes of chancellor Rishi Sunak’s announcement, while property portals have also published figures showing the immediate interest generated.
Patience and resilience needed
Lloyds Banking Group managing director for intermediaries and specialist brands Mike Jones told Mortgage Solutions lenders were adapting to the situation but they were expecting another influx of applications.
“The recovery in activity levels in the UK housing and mortgage markets has been remarkable, particularly given more limited availability of lending at the highest LTV range,” he said.
“This growth isn’t just pent up demand either, and we are seeing high levels of consumer confidence in property feeding into activity in the market.
“This has presented significant operational challenges for many lenders that have simultaneously been adapting ways of working to deal with the challenges of Covid-19 and continuing to support customers.
“The chancellor’s announcement on changes to stamp duty will inevitably further up the pace following the relaxing of lockdown restrictions which has already boosted activity.”
He added there was a need for cooperation to help ensure applications could proceed smoothly but more slowly.
“We’re in this together as an industry and without doubt this will be a challenging period for us all, requiring patience and resilience from the whole of the market – including allowing extra time for cases to be worked,” he continued.
“Routine update calls are a significant drain on lender capacity; instead greater use of lenders’ various automated tracking tools will help manage call volumes and enable urgent cases to be properly prioritised.”
Challenges across the market
Leeds Building Society CEO Richard Fearon agreed that the changes would “light a fire” under the market and bring a need for understanding and cooperation.
“There is no doubt that Covid-19 has had a huge impact on how we operate, with a focus on keeping colleagues and customers safe. These are challenges being faced across the market,” he said.
“Intermediaries have faced similar challenges and we are pleased to have been able to support them in this.
“The mortgage market has been remarkably resilient in this, especially in June, even before the stamp duty changes were announced. The stamp duty changes will light a fire under the market.
“I’d like to thank brokers for their support and for their patience as we work through the unique challenges of social distancing, remote working and limited valuation capacity over this time.”
Be upfront with brokers
Brokers will need to play a key role in keeping borrowers informed of the situation and are prepared to do that.
Sally Laker managing director of Mortgage Intelligence acknowledged that it was important to work with lenders in the current climate.
“As intermediaries we are customer facing and can work with managing expectations on time scales,” she said.
“Lenders and intermediaries share that passion of wanting to help customers but it might take a little bit longer in the current transaction process.
“If we know in advance it’s going to take a bit longer we can help manage customer expectations and we can get where we need to be. It’s about working together because we both want the same outcome.”
Laker added that being aware of the situation up front would also prevent the need for case update calls.
“We don’t want lenders closing their doors to manage capacity,” she added.
Good conversation for advisers
Mortgage Advice Bureau deputy CEO Ben Thompson noted that advisers were well versed in understanding lenders’ service levels and that much progress had been made since the start of the pandemic.
“We are in a very good place compared to three months ago, think about what lenders and brokers have done in that time, it’s amazing,” he said.
“There is a much more understanding broker and customer base given the current situation as well.”
However, Thompson noted that communications from lenders “have been really good on the whole” and brokers could further help the situation by ensuring cases were well packaged.
“It’s upon me as an adviser to know the levels lenders are working on,” he continued.
“Typically, those with the best products are the busiest, but then we have to have a conversation with the borrowers about price versus time. That’s an aim for many advisers to be having.”
Matt Lowndes takes up innovation role at MAB – Interview
“Technology is my passion and has always played a huge part in what I do,” says self-confessed IT nerd Matt Lowndes.
So when he was asked to become innovation director in April, seven months after joining Mortgage Advice Bureau (MAB), he knew he had landed a job right up his street.
Matt joined MAB on 1 September last year after working as managing director of London-based brokerage Coreco, which he helped found in 2009.
After heading up the company for more than a decade he left to become a business consultant in the propositions team at MAB.
“I started at Coreco 10 and half years ago and as much as I loved being there, I was ready for a change,” says Matt. “I wanted to be far more involved in the exciting technology coming our way and show other intermediaries how they could use it to improve their businesses.”
Change has certainly come in spades for Matt.
Finding the best in the business
In April he was given the more formal job title of innovation director with a brief to challenge the status quo and meet cutting edge businesses to understand what was possible for the mortgage industry.
He is tasked with being the liaison between the firm’s brokers and business partners and the company’s 50-strong technology department to make sure MAB is focused on delivering the most relevant solutions that will drive up business performance.
MAB’s CEO Peter Brodnicki is passionate about the benefits of technology. As well as building the company’s own technology he sees the sense in partnering with specialist companies to use the tech they have already built.
With this in mind, Matt is on the lookout for exciting companies that have developed new ways of doing business and seeking opportunities to collaborate with them.
The company’s vision, says Matt, is to act like a prop and fin tech incubator, guiding firms that are relevant to MAB’s long-term vision and helping them to grow their potential.
But having got up to speed with the company’s current projects and long-term goals the world turned on its head when the pandemic hit, temporarily shifting the firm’s immediate priorities.
Ready or not, when the government announced its lockdown measures in mid-March the mortgage advice community was propelled into home working.
The lucky ones already worked on cloud-based systems, had personal offices set up at home and had heard of Zoom or Microsoft Teams.
The unlucky ones are perched on the end of the kitchen table, working on a laptop, trying to join team meetings with a muted microphone while struggling to upload documents and advise their clients remotely.
This is where Matt comes in. As innovation director, his role is to help quickly implement changes that will enable advisers to overcome practical challenges, and right now that is working from home.
“A lot of ARs just weren’t set up for this,” says Matt. “So we have reordered our road map of technology projects and accelerated any of those that will help advisers to do their jobs at home.”
He has always loved technology, and remembers being fascinated by the new inventions on the futuristic television programme Tomorrow’s World as a child.
At school he knew his strengths lay in the practical subjects rather than academic. When he left, he studied mechanical and electrical engineering at Kingston College, then civil engineering at Leeds and Nottingham.
He likes the practical application of technology, how it can solve problems and make calculations easier. The practical rather than academic approach is the style he uses in his new job.
Having run his own mortgage advice firm, Matt says he can empathise with the difficulties of other broker business owners.
Before the lockdown measures were introduced, as a consultant he was meeting about five businesses a month, finding out how they worked and what their challenges were.
He explains to them what current solutions are available and agrees on their immediate requirements and finds out, if they could have anything they wanted for their business, what would it look like.
He then reports the feedback to MAB HQ to make sure the technology being built will meet firms’ needs.
“As innovation director, Peter wants me speaking to firms inside and outside the group, so I am able to challenge and widen our thinking and help influence MAB’s priorities.”
Although his feet haven’t touched the ground since leaving Coreco, Matt misses some of his old life at the firm he helped to set up.
“I learned masses when I was there and left some amazingly talented people behind which is a shame. Hopefully, I helped some of them grow and helped them to be where they wanted to be in my own way.”
MAB coronavirus results ‘very encouraging’ as 2019 completions hit £16.7bn
MAB noted that as expected, focus and demand since the pandemic hit has increased in the re-mortgage and product transfer markets, and that it has prioritised resources in this area.
It added that while not all remortgage cases could be fully progressed due to lender and valuation restrictions, product transfers have significantly increased in recent weeks.
“By the time government restrictions are lifted, our typically purchase focused appointed representative (AR) firms will have improved their procedures for servicing existing clients in this sector, and we expect that increased efficiency to be maintained once purchase activity starts to return,” it said.
MAB also highlighted that although it expected protection sales to reduce in line with purchase activity, the pandemic had resulted in heightened awareness of the importance of these products.
“Alongside our realignment of resources to remortgage and product transfer transactions, is our immediate opportunity to have a meaningful impact on the lower protection attachment rates seen on non-purchase mortgages,” it continued.
“Plans are already in place to ensure the improvements we are seeing are maintained and built upon when advisers become busier again.”
Completions rise to £16.7bn
The firm made the statement as part of its annual results publication which revealed it completed £16.7bn worth of mortgage lending including product transfers in 2019 – an increase of 20 per cent on 2018.
The advice firm claimed a 5.7 per cent share of the UK new mortgage lending market, up from 4.7 per cent in 2018, with £15.2bn of completions going to new lenders – also up 20 per cent from the previous year.
Adviser numbers were also up 20 per cent hitting 1,457 at the end of 2019, including 82 from its purchase of First Mortgage Direct.
Overall in 2019, revenue was up 17 per cent to £143.7m and pre-tax profit was up 13 per cent to £17.7m.
The adviser growth continued into 2020 although the impact of the coronavirus has started to be felt with 1,473 advisers at 17 April 2020, including 196 currently furloughed.
“The furloughed advisers relate mostly to ARs that have strong links to estate agencies or the new build sector,” MAB said.
“Some adviser attrition has also occurred among the lower performing advisers and it is unlikely any of those advisers will be replaced until the purchase market fully recovers.”
The coronavirus has impacted the firm with the share price tumbling from the recent high of 800p on February 26 to just 385p on Mar 19 as stock markets around the world collapsed, but it has since recovered to 525p today.
The firm drew down its £12m revolving credit facility on 20 March 2020 saying it was “in a stronger position than many to deal with the challenges to come”.
It also halved its proposed final dividend to 6.4 pence per share, with the intention to pay a further 6.4 pence when the board considers it prudent to do so.
“It is too early to predict the extent of the disruption to trading in the coming months and the associated impact on our results for the full year, though we do expect to see a reduction in revenue and profit. However, we remain very optimistic about MAB’s growth prospects,” the firm said.
Prior to the coronavirus impact, MAB said it had seen a clear change in customer sentiment following the General Election in early December.
This led to much improved activity in the housing market from the start of 2020 and the marked increase in activity remained strong up to the end of March 2020, despite increasing concerns about the coronavirus pandemic.
Technology an enabler
Chief executive Peter Brodnicki (pictured) said he was pleased with the results and that MAB had always had a clear strategy of pursuing and delivering long-term sustainable growth in market share, regardless of mortgage and housing market conditions.
“In 2019 we increased our market share of new mortgage lending to 5.7 per cent, a strong increase of 20 per cent versus the prior year,” he said.
“I am particularly pleased with our growth in new advisers over the last year, especially since as predicted, the subdued housing market led to very limited growth from the circa 40 per cent of our AR firms that are linked to estate agents.”
He added: “Technology continues to be an important growth enabler for MAB. We started piloting the first part of our new platform at the end of 2019 and we have now commenced a programme of implementation of new technology-led processes.”
Nationwide integrates DIPs with Twenty7Tec’s Apply platform
It is expected that users can receive an instant DIP on remortgage cases from Nationwide, without needing to re-key data into the lender’s portal.
A spokesperson for Nationwide said brokers will not need to re-key the DIP onto the society’s portal, but client information will need to be re-entered for the full mortgage application.
However it is looking at resolving this in the future.
Nationwide conducted tests and found the DIP results always matched the results returned from the society’s portal as Apply runs the decision against its credit scoring system, the spokesperson added.
Initially, the service will be made available to Connells Group brokers using Apply, before being rolled out to Mortgage Advice Bureau, and then the wider market.
The integration is the first service that has gone fully live to brokers after Nationwide announced in November 2019 that it was launching a ‘sandbox’ pilot to enable third party systems to connect with its credit risk and back office systems.
The society said it would continue to work with a range of third parties to develop and support further technological innovations in the broker market.
Ian Andrew (pictured), director of intermediary relationships at Nationwide Building Society, said: “This is a big moment for Nationwide and we’re delighted that the outcome of recent tests in our API sandbox with Twenty7Tec have been so positive and that we’re now in a position to put our DIP API for remortgages live.
“We expect to expand the API with other third-parties in the near future and we continue to look at other ways we can use technology to improve the service we offer brokers both now and in the future.”
James Tucker, CEO at Twenty7Tec, added: “We’re very proud to be the first broker platform to have been chosen to work with Nationwide on this project, and we look forward to seeing the results that it produces.”
MAB opens learning facility to welcome ‘new blood’ to mortgage industry
The new MAB learning and development centre will allow up to 20 learners to undertake their courses. It is a two-floor facility and the top floor will be used for course delivery while on the bottom floor, there will be a recording studio to film e-learning packages and tools.
MAB said the academy played an “integral part” in “bringing new blood” into the wider mortgage sector.
The existing MAB training academy, which has been running since 2013, has qualified over 300 people to become mortgage and protection advisers.
David Bedlow, head of learning and development at Mortgage Advice Bureau, manages the UK-wide team to deliver training programmes across its entire distribution.
He said: “It is very exciting to announce the opening of our new learning and development centre. This is a dedicated facility for our learners and will ensure we continue to develop and improve our offering.
“We are extremely proud of the MAB learning and development academy, and the role it plays in helping new people to start a career in financial services.”
Bedlow added: “Due to the popularity of courses, we’ve always held the academy offsite at purpose-built facilities which has impacted on its results in a positive way. This new facility will allow us to do similar with all of our other in-house programmes.”
MAB appoints national new homes account director
Akram (pictured), who is a double British Mortgage Awards winner, previously worked for First Mortgage Direct, which was acquired by MAB in July last year.
She will be working alongside new homes director Andy Frankish as part of the MAB new homes team.
“I can’t wait to get started, MAB is an extremely well known brand in the new homes sector, and it is an absolute privilege to take up this role,” said Akram. “I aim to bring my experience and relationships with some of the top house builders with me and apply that on a national level for MAB. I’ve had a fantastic time at First Mortgage Direct and I’m now looking forward to what the future holds with this new challenge.”
Frankish added: “Mobeen has spent the last 12 years doing an amazing job of developing the First Mortgage Direct new homes business, making them the biggest new homes broker in Scotland.
“Mobeen makes the jump over to the MAB team with the same mandate to develop our new homes relationships with the top house builders right across the UK.”
MAB posts double digit growth in revenue and adviser numbers
Revenue increased by 16 per cent to £143m for the year ending 31 December 2019.
The figure comprised £135m from the core MAB business and £8m from First Mortgage Direct, which was acquired on 2 July 2019.
Revenue at the core MAB business grew by 10 per cent. This was driven by an increase in the average number of advisers during the year to 1,293, up 14 per cent.
The total number of advisers across the group had risen by 20 per cent to 1,457 as of 31 December. At the core MAB business, this was a rise of 13 per cent, or 162, to 1,375.
However, the average yearly revenue per adviser at the core business dropped by three per cent. MAB attributed the decline to impacts on the housing market of “continuing political and economic uncertainties associated with Brexit, particularly in the earlier part of 2019.”
The second half of the year saw “improved productivity” compared to H1. MAB added that it expected to generate growth in revenue per adviser during 2020, “irrespective of activity in the broader market.”
This would be driven by a combination of “the UK General Election result and many MAB initiatives including process efficiencies and lead generation supported by technology developments,” it added.
Peter Brodnicki, chief executive at MAB (pictured), said: “We delivered a strong performance despite prolonged political and economic uncertainties throughout 2019. We continue to deliver on our strategy — to grow our market share in all conditions by investing in sustainable growth whilst maintaining a strong financial position.”
“We are capitalising on our protection and lead generation initiatives to further improve performance. And we continue to pilot our new technology platform, with roll-out to a number of appointed representatives (ARs) expected in the first half of 2020. These initiatives are important recruitment drivers for ARs, advisers and lead sources,” he added.
Pre-tax profit for the year was “in line with expectations”. The group reported a balance sheet cash position of £21m, including £7m of unrestricted cash balances.
At year-end, MAB had no drawdown on its revolving credit facility, which was put in place at the time of the First Mortgage Direct acquisition.