Brokers have been warned to be on their guard for an attack on their market share as lenders prepare new technology to allow them to access customers directly. However, this campaign seems to fly in the face of that threat.
This week, our panel of experts consider the significance of Virgin Money’s campaign for the wider market.
Robert Sinclair, chief executive, Association of Mortgage Intermediaries, praises Virgin’s campaign for displaying confidence and sending a strong message to the whole market.
Peter Rogerson, mortgage director, Virgin Money, explains that launching the campaign made sense to the lender with intermediaries playing a key role in the success of Virgin’s mortgage strategy.
Martin Reynolds, chief executive, SimplyBiz Mortgages, says Virgin’s campaign is the next step in already strong engagement with the intermediary market.
The recent two-pronged initiative from Virgin should be welcomed, applauded and supported by all brokers. While not the first lender to suggest to its customers that they should go back to their broker for advice and assistance, this initiative does break some new ground.
To include this in a fully co-ordinated multi-channel advertising campaign, rather than just in letters is undoubtedly new. The fact that this comes from a top 10 lender that has its own branch network and a desire to grow its direct banking business shows a degree of maturity much needed in the market.
This coupled with their website which will assist consumers in finding a mortgage broker is as much as the broker community could hope for. While this will not stop others going down the technology route and working harder to retain existing customers, it is a commitment in a competitive market to the source of much of their business.
In the current climate where price is near the bottom, commitments like this that display confidence that their products will stand up to the competition and sends a strong message to the whole market.
It will be for other firms to decide if and how they respond, but this is clearly a line in the sand that displays Virgin means business and are true supporters of the intermediary. I am sure that national account managers across the country are asking their marketing departments what they have in their pipeline.
Our new campaign is unusual in terms of us being the only lender in the market advertising for the benefit of intermediaries, but it is entirely in keeping with the promises we have made. The vast majority of our lending is sourced through the intermediary channel and our partners are key to the Virgin Money mortgage strategy. We are committed to further strengthening our intermediary relationships and our new campaign is further demonstration of that commitment. It may be unusual, but it makes sense to us.
This isn’t about driving all direct sales away, because we recognise that some customers prefer to come to us directly and we will continue to ensure they receive an excellent service. However, we also recognise that intermediaries have become increasingly important to customers since the introduction of the MMR and provide a vital source of market advice. We want to shout that out, remaining confident that due to our products and service, intermediaries will send some of their clients back our way.
We developed findamortgagebroker.co.uk to help consumers find an intermediary that can offer market advice. We worked with some of our partners to develop the proposition and while it’s not compulsory, well over 8,000 have agreed to register their details on the site. Everyone’s better off – the customer, the intermediary and ourselves as the lender. Again, it just makes sense to us. Will other lenders follow us? That’s up to them.
This is a very bold move by Virgin Money and shows a desire to keep the intermediary at the heart of its proposition. Post-MMR we have seen a greater number of consumers choosing the intermediary market as their route to accessing mortgage finance. There are a number of well documented reasons for this but Virgin Money are showing a willingness to embrace this trend rather than look at ways to re-balance the direct versus intermediary percentage, as we know other lenders are attempting.
During the past few years the Virgin Money proposition has been transformed as it has proactively engaged with the market, listened to feedback and made positive changes to its proposition. Its service has improved beyond recognition and the breadth of its criteria has widened prudently. The new campaign is the next step in this intermediary engagement.
It is refreshing to see this and except for Kensington last year, it rarely happens. There are obviously reasons why lenders choose their different distribution strategies but what has been constant is good quality advice given by the intermediary market. It would be good if all lenders followed a similar line as there is still a perception by many that they will not qualify for a mortgage, which is untrue. Congratulations Virgin on a bold move.