BSA Conference: Countrywide CEO accuses brokers of holding lenders hostage

5 May 2010 | By Natalie Thomas

Grenville Turner, group chief executive officer at Countrywide, has welcomed the fact that half of mortgage lending is done direct and accused the broker marker of effectively holding lenders hostage in the run-up to the financial crisis.

Turner gave a presentation to delegates at the Building Societies Association annual conference in Manchester today outlining that around 50% of mortgage business currently being generated comes from the direct channel.

He says: “We’ve seen a change in direct mortgages and I think that’s a good thing so that lenders shouldn’t be held hostage by intermediaries.

“There should be a balanced market where consumers are able to get advice and equally where lenders don’t become overly dependent on that source of business.”

When pressed Turner says that between 2005 and 2007 a significant majority of mortgages were being arranged by brokers which gave them too much influence over lenders.

He says: “The power that intermediaries held to influence lender decisions was probably in excess of where it should have been.

“What we needed to move to was a situation where the intermediary sector is important and healthy and encouraging sector, but not necessarily a dominant one and certainly not to the level that they can hold influence over the lenders.”

He adds: “I’m all in favour of an extremely healthy adviser sector - I would be because I have 750 business writers who are intermediaries - but I think a healthy sector is one where this is a sensible balanced relationship between the lender and the intermediary and the consumer. And I’m not sure that balance was there in 2005 and 2006.”

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Readers' comments (30)

Anonymous | 5 May 2010 10:46 pm
On what grounds does Mr Turner believe the "Intermediary" market had too much influence over the lenders? Baring in mind the true intermediary market just offered (may be I'm being a little naive) the most appropriate mortgage product to fit their needs at the time. Think of the implications to the individual should a first-time buyer go in to see a single tied (for mortgages and insurance) supplier and end up not receiving the most appropriate product on the market. The reason why most intermediaries (the ones who don't work from a ghastly panel of six lenders) are such is because they want to provide the best advice to their clients - the only way of doing that is by offering independent mortgage advice.
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Geoffrey Chaucer | 6 May 2010 0:01 am
What a strange comment from the CEO of an 'independent' broker.

If the balance shifts too far to the lenders direct then it will be interesting to see if Grenville can continue to keep his staff as they won't be writing any business.

As a broker, I have seen the change from lenders wanting broker business and then wanting direct business, hence the disparagy between the rates.

As we all know, lending criteria is as tight as ever. Dual pricing is killing off brokers and the principal lenders are calling all the shots.

I would suggest that Mr Turner reviews his comments. If we should see a double dip then he will perhaps be wishing for more lender flexibility rather than less.

Geoffrey.
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Jonathan Miller | 6 May 2010 9:15 am
Very odd comments indeed!

I fail to see how the Intermediary can have any influence over a lender and indeed their policy. The lender recognises the intermediary distribution network and in some ways exploits it by turning business levels on and off where necessary......not the other way round.

A far healthier market would be no more dual pricing i.e. the Woolwich model and clients able to compare deals and indeed quirks of each offer against each other deals rather than the single lender advice they will get from a bank direct.
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Wild Bill | 6 May 2010 9:18 am
Truth Hurts.....The guy talks sense! Obviously the article is going to get bad reviews on here?? It's essentially a broker website, comparable to the Daily Mail publishing a positive article on Labour.
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Mike | 6 May 2010 9:44 am
This chap seems to have his words muddled up. Lenders being held hostage by Intermediaries!?

For the past 12 months, it's the other way round; Dual Pricing, Changing Criteria without publishing it, Pulling rates with less than an hours notice.

The dominant lenders have the market cornered and as brokers, we have nowehere else to go if we are to offer best advice.

The lenders attitudes and conduct flies in the face of TCF and has the broker market run ragged trying to work out how to get a case through.

I would welcome the writer of this article to make contact with brokers to understand a little more as to who is being held hostage, who is being treated fairly and who are the advisers that provide choice, advice and a decent level of service!

It certainly isn't the direct channel.
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Peter Wilson | 6 May 2010 9:46 am
"There should be a balanced market where consumers are able to get advice."

This man obviously believes that the clients going direct actually receive advice. We all know in reality that they do not receive advice in most cases.
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Anonymous | 6 May 2010 9:46 am
This man talks utter nonsense & I would expect a CEO to have more common sense than deliver a statement like that!My children could give a more balanced view on this than he has. Brokers need a livelihood the same as he does. How much does he get paid???!!
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Anonymous | 6 May 2010 9:48 am
I cannot believe Countrywide comments like this. As an ex-packager who soley used them I feel betrayed to be honest.

I am sure they are simply a transparent ploy to allign themselves closer to the lender market and gain more business, which shows how shallow he is.

The fact is he is so mis-informed it is shocking for his position in the firm.

The consumer will always take independent advice over tied as it is in their best interests and why such a vibrant lending community is established in the UK today.

The fact is lenders have milked the industry in the good times just like brokers and they did it with their eyes open. The only reason why diect is building is because of dual pricing which is immorale and against treating customers fairly.

People have to be very careful about how far they push the intermediary sector, because specialist lending will return and the battle will once again commence.

Lenders being held to ranson by brokers.................you must be having a laugh.
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Anonymous | 6 May 2010 9:58 am
The only ones being held hostage are brokers and in turn their clients. Independent advice is the only way to treat customers fairly.Direct advice tends to be 'information only' as the majority of bank and building society staff are insufficently qualified or experienced to give advice. Mr Turner's comments are straight from the Gordon Brown school of economics, lenders haven't been influenced by brokers but by greed, he's playing the Gordon Brown blame game if you ask me.
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Anonymous | 6 May 2010 9:58 am
Unbelievable comments!
Talk about Ivory Tower comments.

Anyway, given their panel arrangements what would he know about true whole of market advice.

I wonder if his brokers are happy that over 50% of the available mortgages are "Direct only". Comments anyone?
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