Simon Carr, Sales Development Director
It's like the remake of an epic blockbuster.
Let me take you back to 2007-2008, when several unprecedented events converged to create what some economists have described as the worst global financial crisis since the Great Depression of the 1930s. This was a time when the UK mortgage intermediary market felt the impact by watching lending criteria tighten.
In 2009, the regulator announced its intention to review the mortgage market and sought to introduce a stable and sustainable responsible lending environment. The result of the review introduced changes in 2014 which saw the introduction of robust affordability checks, ensuring customers could afford payment commitments to their secured debt, both in today’s low rate environment but also as interest rates increase. Additionally, in what should now be seen as a positive step, the regulator introduced the requirement for advice to be mandatory on mortgage sales. The latter saw direct to consumer lenders suffer delays to service, resulting in more customers seeking advice from mortgage intermediaries.
In this sustainable environment, we have seen the availability of products increase and perhaps, more importantly, demand for independent advice taking a strong hold.
But it isn't over… the story continues and on 21st March 2016 (this date being the deadline) another event is set to signal change. Your battle for independence will be challenged. Changes brought about by the European Mortgage Credit Directive (EMCD) and applicable changes to the Mortgage Conduct of Business (MCOB) mean that you can only be truly independent if you consider the entire market as part of your advice process.
So what's the problem? Initial disclosure requirements mean that you must define your scope of service - if you don’t offer products representative of the market you may find that you cannot continue to use the title “independent”. What is clear is that many mortgage intermediaries have considered what this means and recognised that for those customers looking to capital raise, they should be considered for a second charge as well as a remortgage. After all, a remortgage and a second charge are both described by the regulator as a ‘regulated mortgage contract’.
What's clear is that Principles 6 and 7 set out high level standards when considering the needs of your customers. MCOB 4.4A describes your obligations during initial disclosure and further describes what is considered to be independent.
For those mortgage intermediaries who have already considered their scope and requirement to offer second charge loans, I am sure that you will have made your own arrangements. Alternatively, you will have approached your mortgage club (if directly authorised) or engaged with your network (if an appointed representative) to discuss your requirements and source the correct solution.
We all resist change – it is after all human nature. Many see change as a negative, but others see it as a huge opportunity.
The Mortgage Market Review and the EMCD bring about sustainable market conditions and drive sound customer-centric outcomes. The changes in the regulation of second charge loans and how they are treated give you an opportunity to provide the right solution for your customer. If you don’t have a solution in place, speak to a mortgage club or your network and voice your concerns regarding the products you would like to offer and ask for their assistance.
It’s not quite 4th July, but 21st March heralds the day of Mortgage Independence.
The next thing you know, we’ll all be talking about the resurgence of the second charge market. Now that's a film I'd watch!
The Sunday Times recently released its 16th annual 100 Best Companies to Work For list, which includes six firms from the mortgage market.
The data gathering and analysis behind the list are extensive and the outcome is largely dictated by the firms’ employees, who fill out the survey. A total of 241,361 employees completed the survey this time around, answering questions about their firms and their bosses, whether they thought their rewards were fair and how much they felt their wellbeing was valued, among other things.
At the heart of these leading companies is culture. This is something many of the large banks have got wrong and, as such, it was no surprise to see none of them listed. By far the largest mortgage firm to win an award was Nationwide Building Society, which achieved an impressive third place in the large-employer category. According to the data, its 17,735 staff are well aware of the organisation’s strong social conscience.
In the mid-sized category, Charter Court Financial Services (also known as Precise Mortgages) came tenth. Founded in 2008 with just 27 staff, the company has grown to two divisions – a savings bank and a mortgage lender – and more than 300 employees. Staff rate the organisation highly, putting it in the top 10 for the categories of ‘fair deal’, ‘wellbeing’, ‘leadership’ and ‘my company’ .
They also say they are excited about where the business is going.
Skipton Building Society was a winner too, with employees considering the mutual to be run on strong values. Staff can put forward suggestions via an intranet forum and questions can be submitted to chief executive David Cutter. It is also possible to buy or sell up to two days’ paid leave a year in exchange for salary.
Also on the list was Just Retirement, with staff believing they could make a valuable contribution to the success of the organisation.
Meanwhile, Hanley Economic Building Society achieved success on the best small company list. Seventy-five per cent of the firm’s managers have been promoted internally. Their development has included external leadership and management courses and/or qualifications.
Last but not least, congratulations to Gopher Money, which was the only mortgage broking firm to claim a place in the list. The survey found the firm values the attitudes of its employees and aims to create a flexible workplace in which people feel motivated and supported. Founded five years ago, it now has 130 employees, with 90 per cent of them having been promoted internally. Staff feel they can speak out when things are going badly and they view bosses as role models.
I can speak only on behalf of ourselves but we spend a decent proportion of our company resources on ensuring our culture is one we are proud of. Underpinning everything we do are our ‘REACH’ behaviours: respect, excellence, attention, challenge and honesty. I suspect all the winning firms have something similar in place, as indeed do many of those not included in the list.
Notice there is no mention of business levels or profits. Obviously both are highly important but I expect that for most, if not all, of the winning firms, such factors are an outcome of having a great culture. After all, happy customers start with happy employees.
It would be great to see more mortgage firms in next year’s Sunday Times awards and I know many on the distribution side that would be worthy winners.
Charter Court Financial Services (CCFS) which is based in Wolverhampton has been ranked tenth in The Sunday Times Best 100 Companies to Work For 2016.
The firm employs over 350 people at its headquarters in Wolverhampton Business Park and owns Charter Savings Bank, one of the UK’s leading challenger banks with over 40,000 savings accounts and balances in excess of £1.7billion since its launch in March 2015.
Over the past eight years CCFS has experienced unprecedented growth, and is a significant employer in the area. Since 2008 the workforce has grown from just 20 employees to 362.
Ian Lonergan, CEO of CCFS commented: “With the launch of Charter Savings Bank and developments in our mortgage business, the business has trebled in size in under two years. But we don’t want this growth to change how we do business or alter our friendly work environment. We have a fantastic team and we always look for ways to make work a more positive and rewarding experience for them so it’s great to have our efforts recognised by our employees and The Sunday Times. We are always on the lookout for more talented people to join our team and this award will undoubtedly help us achieve that in the future.”
The Sunday Times Best Companies to Work is a highly prestigious award which champions the importance of maintaining a happy and motivated workforce in successful high growth businesses.
Precise Mortgages, the specialist lender which launched its MCD compliant platform on 15th February has paid out on its first MCD compliant second charge loan which was submitted by Fluent Money.
The second charge loan was for £175,000 at a rate of 4.55% per annum, giving an APRC of 5% and completed on 25th February 2016..
Alan Cleary, Managing Director of Precise Mortgages says: “We were ready for MCD in plenty of time so it is business as usual as far as we are concerned and I am not surprised that Fluent Money were the first to get a loan paid out as they too have been ahead of the game..
Tim Wheeldon, Joint Managing Director at Fluent Money commented, “Preparation and cooperation between both ourselves and Precise Mortgages were the key components in ensuring this case completed without a hitch. There has been a lot of hard work on both sides, but MCD should hold no concerns for advisers and their clients when we can demonstrate that lenders and distributors, who are properly prepared, can complete cases just as quickly as before.”
Precise Mortgages, the specialist lender which launched its first HMO mortgage products last month, has expanded its lending criteria to accept properties with up to eight bedrooms – an increase from the six accepted when the products were initially launched in January. Last month, the lender also launched Ltd Company products as well as improving its criteria for buy to let landlords in retirement.
Mortgage brokers can submit HMO and Ltd Company buy-to-let cases through authorised packagers, as well as direct with the lender.
Alan Cleary, Managing Director of Precise Mortgages says: “Our specialist buy-to-let products have been really well received by mortgage intermediaries. In order to meet ongoing market demand, we are continuing to expand both our product range and lending criteria. Both professional and retired landlords will increasingly need specialist products as taxation plays a bigger role in their overall investment decisions.”
Doug Hall, Director of 3mc added: “It’s great to see a major specialist lender enter the HMO space. Precise Mortgages have launched into more new product areas so far this year than most lenders will do in an entire year. More choice and more competition equal good news for brokers and their customers. Also, it is great that these products are available via 3mc club as well as the packaged route.”