Robo-advice is not a broker-killer – Salentino
The first sourcing systems tried to exploit the internet over dial up.
Now today’s, ultra-fast sourcing includes an ever-increasing depth of criteria and steps towards full API integration.
When we add online submission, downloadable documentation, the integration of electronic identification and Open Banking, the mortgage process is going through its biggest revolution since we were hand writing application forms and faxing them to lenders.
The current bogeyman buzzword is robo-advice.
But for all the hype, we are a long way from the all-singing, all-dancing replacement for human advisers.
However, while robo-advice is not the all-conquering ‘broker killer’ that it has been purported to be, we actually owe a debt of gratitude to those companies who are pushing the technology.
Why? Because it should be a wakeup call for every adviser in the market.
We cannot ignore what technology can do for all of us.
Take your customers
Advisers must embrace the technology on offer to remain relevant and help them improve their businesses and enhance, rather than replace, personal contact.
Anyone not staying very close to their existing clients and contacting them regularly is going to find they will go elsewhere, and the internet is the first place they will look.
Be under no illusion, lenders, robo-advisers and fellow brokers are actively seeking to take your customers away from you.
Make technology an ally rather than treating it as an enemy and spend as much time on existing customers as on seeking new ones.
By making sure customers appreciate why human experience, empathy and close contact will always trump robo-advice, the future is rosy for advisers in 2019.
Zephyr completes first case and expands distribution
Zephyr was launched last month on behalf of external funders with Computershare providing all marketing, underwriting and administration.
Mortgages for Business brokered the first buy-to-let mortgage to complete with Zephyr during its pilot launch.
The case was made for an experienced landlord who does not own her own home and needed finance to purchase a two-bed terraced house in Slough.
A formal offer to lend a total of £267,750 at 75% LTV was issued in 14 working days.
Mortgages for Business managing director Steve Olejnik, said: “We were delighted to have been asked to run the exclusive pilot which was designed to test Zephyr’s systems and procedures before launching with a wider panel of intermediaries.
“I’m pleased to report that we were particularly impressed with both the underwriters and the speed with which the first case was processed.
“We’ve got several more deals in the Zephyr pipeline and they appear to be going well too,” he added.
Meanwhile, the lender has continued its roll out with packager and distributor Complete FS.
Complete FS director Tony Salentino said the firm was impressed with the product offering. He said terms up to age 95 at the end of the mortgage and lending on flats above commercial and ex-local authority properties made the proposition very attractive.
Zephyr Homeloans head of sales Peter Charge said: “It’s great news that we’ve completed our first Zephyr mortgage with Mortgages for Business.
“The company is a strong launch partner for the Zephyr brand, and we look forward to continuing to work closely with them in the future.”
He added: “We are delighted to work with Tony and the Complete FS team. We are impressed by their proven track record in the specialist buy to let market and we look forward to working with them.”
Arranging the mortgage is just a small part of the job – Salentino
Providing a family with the protection to ensure it would be taken care of that in the event of anything happening was just as important as the mortgage itself.
In the years that followed, we have had unfortunate episodes surrounding the sale of protection products.
We only have to look back to payment protection insurance (PPI) mis-selling, and further back, the Mortgage Indemnity Guarantee (MIG) scandal, followed by the witch hunt over the sale of low cost endowment policies to see why advisers lost their appetites for providing advice on protection issues.
The sad outcome is that fewer customers are being informed about the benefits of ‘good’ protection because mortgage advisers still feel understandably reluctant to provide this kind of service.
Yet in talking to contacts among networks and those supporting directly authorised firms, it remains an uphill battle to persuade advisers to press the case with clients that protecting themselves and their assets, is the right way to go.
Responsibility for all
A whole generation of advisers has grown up in a post-credit crunch and post-protection scandal world.
First-time buyers and movers are struggling to meet stricter affordability tests.
So there is a perfect storm of advisers reluctant to press customers already facing the prospect of making monthly mortgage payments, on paying more to protect them in the event of life changing events.
Yet, there is a responsibility on all of us to make customers aware of the dangers of ignoring this most crucial protection and we do so at our peril.
RIO – a new opportunity
According to an FCA report in January, one in five mortgages in the UK are on interest-only and of those, 1.67 million people are approaching retirement with an interest-only mortgage, having paid off little, if any, capital.
Many of those soon to be retirees have no plan in place to repay their mortgage at retirement.
With the FCA recognising that the issue required innovation from lenders, followed by their backing for a new breed of lending product for later life, the Retirement Interest Only (RIO) mortgage, along with the existing equity release products, the later life lending sector has a lot to offer advisers and their customers.
This is going to be the sector in which to be involved.
What have packagers ever done for us? – Salentino
There has always been some resistance to the idea that a third party should sit between an introducing broker and a lender.
Yet, here we are in 2018 and our company Complete FS has been providing a packaging service for 25 years without a break, probably longer than many of today’s brokers have been practicing.
The reality is that good long-standing packagers provide a service that has yet to be equalled or improved upon, to both the intermediary and lender.
New lenders will always want to establish immediate distribution and keep the costs of initial processing low.
Experienced packagers have not only been a proven source of distribution, but also a logical resource for lenders as a combined helpdesk and communication hub for broker contact.
This comes on top of fulfilling their main role of producing fully packaged cases for lenders to check and issue a mortgage offer with minimal intervention or additional requirements.
For brokers, good packagers have been a consistent source of information, knowledge and expertise.
Moreover, they are able to provide specialist lender market answers for brokers looking to source a lender for their more quirky cases and seek reassurance about their own research.
In today’s market, where borrowers and their advisers have called for more pragmatic borrowing solutions in the face of lending by numbers, the growth of specialist lending has been spearheaded by packagers taking alternative solutions to the broker community.
Human decision making will always have a dominant role within the specialist lender environment and packager personnel with their close working ties to lender underwriters have been integral in helping to grow this sector.
Not everyone is a fan
However, not everyone is convinced that the packager model is the right one and packagers need to respond positively to these concerns.
Complete FS and other forward thinking packagers have invested heavily in technology to improve communication and processing times.
But it is not just about technology. Good packagers are looking to increase broker access to panel lenders.
In our case, a rotating roster of lender staff spend time in our offices every day, making themselves available to discuss enquiries and existing cases.
In addition, many lenders provide us with their own underwriters to produce offers, meaning there is no difference in service with the broker phoning or dealing with the lender directly, but with our additional expertise supporting them.
Coming full circle, the case for packaging is as strong as ever.
Lenders have widely documented that the conversion ratios between well packaged business and direct broker business comes out hugely in favour of the packager.
At a recent review with a major specialist lender we were shown that only 38% of their direct business converted to completion, while ours was 78%.
So while we can’t claim to have invented wine, roads, or aqueducts, Complete FS helps brokers obtain higher success rates for their clients without any sacrifice of procuration fee, and lenders enjoy professionally packaged business combined with enhanced distribution.
Complete FS bolsters resi and BTL teams
Becky Odams joins the residential team as a case manager, after 11 years in estate agency followed by six years working in a local advisory business dealing with pensions, mortgages and insurance.
Lucy Crascall joins the buy-to-let team as a case manager from a career in retail.
Tony Salentino, director at Complete FS, said: “We are delighted to welcome Becky and Lucy to Complete FS. Both of them bring skills which will be important to the case manager roles they are now filling. Our new business volumes have continued to increase and this was an excellent time to bring in new team members to maintain our excellent service standards.”
Salentino added: “In the 25 years of its existence, Complete FS’s strategy has always been to build a sustainable business packager model dedicated to supporting the intermediary sector. Providing a continuous service throughout that time has largely been down to the quality of the personnel who join us. Becky and Lucy will be valuable additions to our team.”
Secure Trust Bank partners with Complete FS
The partnership will provide Secure Trust Bank with access to Complete FS’ network of registered intermediaries.
Founded in 1993, Complete FS provides and processes a range of mortgage products – including prime, complex prime, near prime and buy-to-let mortgages as well as secured loans and bridging finance.
Tony Hall (pictured), head of sales and marketing at Secure Trust Bank Mortgages, said: “We are pleased to announce this latest partnership with Complete FS. The company has demonstrated its ability to support specialist lenders in the market, and the team’s experience in distributing these products makes them the ideal partner for Secure Trust Bank and our customers.”
Secure Trust Bank launched its mortgage division earlier this year to support residential customers who are underserved by traditional high street lenders.
Financing is typically provided over a 35-year term, with fixed interest rate periods of two-, three- and five-years.
Currently, the bank’s purchase and remortgage products have a maximum loan to value of 85% and a maximum loan size of £2m.
Tony Salentino, director at Complete FS, said: “We are delighted to add Secure Trust Bank to our specialist lender panel. In a short time, they have already demonstrated a real desire to support the intermediary market with individual underwriting, flexible criteria, quick decisions and a real appetite to lend.”
Salentino continued: “Their product range shows they understand what areas of the market are underserved and have cleverly targeted these niche areas.
“We look forward to growing our relationship with them,” he added.
Complete FS calls for move into the margins ahead of Expo
Tony Salentino (pictured), director at Complete FS, said: “Headlines about business volumes falling, focus in the main on the mainstream market. However, the demand for borrowing facilities has not suffered. In fact, there is growing demand for first and second charge mortgages, bridging, commercial and buy to let.”
He added: “The only difference is that the clients either do not fit the rigid profile on the high street or they are not getting a swift enough service from mainstream providers. Rather than worry about the headlines, remember this is actually a golden time for advisers who are prepared to look beyond the high street.”
Complete FS said new business applications over the last two quarters were 40% ahead of the same period last year and highlighted strong enquiry levels for bridging loans and specialist first charge mortgages.
Its Specialist Lender Expo takes place at the Ageas Hilton in Southampton and includes a panel debate and presentations from industry figures such as Alan Cleary, managing director at Precise Mortgages, Keith Street, head of Kensington Mortgages, Marylen Edwards, head of BTL lending at Axis Bank, Adrian Maloney, sales director at One Savings Bank and Hans Geberbauer, CEO at Foundation Home Loans.
Complete reports post-crunch record month
The south coast-based packager and specialist distributor said March saw buy-to-let applications up by 14.2%, secured loans by 29.4% and bridging by 31.6% in comparison with Q1 2016.
Complete is also recruiting for mortgage underwriters and administrators.
“The March figures were particularly satisfying as this was the best month’s trading we have had since the credit crunch,” said director Tony Salentino (pictured).
“Complete FS has traded through three major recessionary cycles in its 25 years servicing the intermediary community. Our experience has shown that our long term success is not built on the product offering, however good that might be, but on the quality of the service we offer.”
He added: “We aim to ensure that we have the personnel who share our belief in serving our customers. Our expansion is controlled and in that way we can constantly strive to improve our service while bringing new people into the business when we need them.”
Last month Complete re-hired previous employee Claire Budden as associate operations director.
It follows the news in January that founding member Damian Cain has rejoined the firm, taking a seat on the board and leading the development of the company’s second charge proposition.
In February, former broker Graham McCabe also joined Complete as business development manager for the South West.
Cain rejoins Complete FS board in second charge loan drive
Cain (pictured) will have overall responsibility for broker relationships and will lead development of the company’s second charge proposition.
He rejoined Complete at the end of 2015 as national account manager, looking after major accounts and developing new business in the south.
Cain was one of the founding directors of the south coast-based company from 1993 until 2008, when he left to set up a student buy-to-let business.
Complete covers the buy-to-let, bridging, complex first charge and second charge sectors.
Director Tony Salentino said: “Phil, Jay and I are looking forward to working with Damian as he takes his place as a full director. Since he rejoined us he has been instrumental in helping to build relationships across the south. His experience of the market will be an increasingly valuable asset as Complete FS continues to grow this year.”
Cain added: “I am delighted to become a director of Complete FS once again, having worked to build the business over many years. We are looking to expand our proposition, while maintaining our reputation for market leading service to introducers and lender partners.”
Complete FS restructures second charge fees to remove barriers for brokers
The packager is offering a flat application fee of £199 along with the lender’s valuation fee and disbursements. The intermediary will determine the advice fee to be charged and there is no master broker fee.
Complete FS director Tony Salentino (pictured) said excessive fee charging was one of the main reasons advisers had been reluctant to adopt second charge loans over the remortgage alternative.
“The options we offer are designed to ensure that advisers have a clear choice to offer clients and also allow them to decide how much they want to take as a broker fee,” he said.
Complete FS is running its second roadshow of the year at Southampton Football Club on 19 May to help brokers better understand the secured loan market.
Sales and operations director at Shawbrook Bank, Maeve Ward, said: “It’s great to see Complete FS leading the way in education as well as addressing one of the main reasons why brokers have avoided second charges in the past; namely fees.
“Now that seconds are regulated in exactly the same way as first charge mortgages, and fees are allowed to be charged upfront, fees have started to come down.”