The non-conformist path to success

Mortgages plc

Mortgages PLC&#39s head office is in central London (pictured). The mortgage-processing centre is based in Glasgow. There are also regional teams for sales, underwriting and packager training. In total there are more than 100 employees. All post-completion administration and servicing is outsourced. Mortgages PLC is owned by Nikko Principal Investments Limited.

Q: How is MPLC structured?

A: The board is made up of four executive directors and three non-executives from Nikko, including chairman Mark Clarke and directors Laurence Morey and Peter Gissell. The executive directors are Trevor Pothecary (CEO), Paul Thomas (chief operating officer), Peter Beaumont (sales and marketing director), and Dereck Wilson (finance director). Tim Cooley joins the executive board in February as chief financial officer. Functions reporting into the executive directors are: sales and marketing, operations, business analysis, IT, finance and credit.

Q: How has MPLC&#39s strategy changed since acquisition by Nikko last year?

A: The injection of capital following the Nikko deal enabled us to push forward aggressively with our long-term strategy of broadening the product range and expanding our distribution. The two go hand-in-hand and, with our enhanced product offering, we have secured and launched correspondent and branded-lending programmes with a number of the leading players in this market such as Solent Mortgage Services, The Mortgage Placement Company and Genesis Home Loans. We have also secured high-profile panels appointments with the likes of Friends Provident, Mortgage Promotions and mortgageforce, which have enabled us to build and develop our direct submission channel for intermediaries.

We rebranded our logo earlier this year, have restructured several departments and have also reviewed all supplier relationships. Since the Nikko deal, we have experienced a period of positive change and rapid growth. It has been an exciting time for Mortgages PLC and all who work with us.

Q: How has the company developed its relationship with packagers and how will this development continue in future?

A: Packagers have long been responsible for the vast majority of Mortgages PLC&#39s introduced business and we remain stout supporters of the packaging market. We recognise the important role that packagers play in the non-conforming market and the value they are able to add to the processing of these mortgage deals. Mortgages PLC has developed its relationship with packagers via initiatives such as exclusive products, branded lending and the appointment of regional packager training officers. We believe that packagers will need to change if they are to prosper in the post-regulation era and we will continue to play a supportive role in the coming months and years.

Q: How will mortgage regulation change the role of packagers and your relationship with them?

A: We feel that the key issue for packagers will be distribution. Regulation will force introducers to review whether they tie to mortgage networks or remain independent. If they choose to join or tie in some other form, then they may have to use a prescribed panel for all their business. This could act to reduce the number of introducers that use packagers and downgrade the role of the packager. Packagers need to demonstrate real added value and quality, and it seems inevitable that all mortgage packagers (whether they deal direct with the public or not) will need to be authorised if they are to survive. We believe that an increasing number of packagers will develop direct arms or accept referrals from previous introducers. Mortgages PLC will be doing all we can to help packagers through this period of transition and we are organising a series of workshops in the new year.

Q: What compliance challenges will statutory regulation present for specialist lenders that source business through packagers?

A: Where the packagers are authorised, lenders should find this a relatively painless transition to make. Under current proposals outlined by the FSA, packagers who are not authorised will require all promotional literature and marketing material to be approved by the lender they are dealing with and this will prove a considerable administrative burden for these lenders.

Q: Do you think Michael Bolton&#39s comments on the UK packager market are justified?

A: We have commented strongly on this in the press already. While any move to improve service standards within the industry should be applauded, we believe that Birmingham Midshires Solutions is implying that any packager that does not carry its &#39seal&#39 is less than perfect, charges higher fees, and is not transparent. It is operating a process of exclusion. Mortgages PLC supports packagers, large or small, and is currently working on a number of initiatives to implement over the next 12-18 months that will benefit all of the packagers we deal with.

Q: Do you have any day-to-day dealings with intermediaries?

A: As a lender which deals solely via the intermediary market we are constantly in contact with mortgage intermediaries and we provide a number of services which benefit them, such as a dedicated business development unit, a full decision-in-principle facility and ongoing marketing support, along with a comprehensive website. We do not undertake administrative support.

Q: Who do you consider to be your main market rivals?

A: Any lender operating in the sub-prime market is a competitor to Mortgages PLC. As well as the traditional sub-prime lenders we now find that this increasingly includes prime lenders as they look to broaden their product offering to encompass the broader mortgage market.

Q: What changes in product design do you expect in specialist markets?

A: We expect that there will be an increasing push towards non-price differentiation. Product features will become increasingly prominent in the specialist markets as lenders find it more and more difficult to reduce their margins. Product design will become more complex and there will be more products that address specific niches directly rather than trying to encompass large chunks of the market.

We anticipate an increase in through lending, where a lender launches and markets products on pre agreed terms and originates specified business volumes on behalf of another lender. This practice will be particularly prominent with smaller lenders who have limited distribution, particularly building societies.

Q: What do you think of the AIFA/NAMBA alliance?

A: As a lender who conducts all of its mortgage business via the intermediary market we welcome the formation of a single trade body. It had been obvious for some time that mortgage intermediaries desperately needed a common voice in order that they were fully represented in the consultation process. This new alliance needs to act swiftly to make its voice heard during this process.