Q: How is Leeds & Holbeck structured?
A: Leeds & Holbeck Building Society's board consists of two executive directors – chief executive Ian Ward and David Pickersgill, deputy chief executive and finance director – and six non-executive directors. The society's non-executive chairman is Robert Wade. The business operates mainly from its Leeds head office and a nearby telephone-based customer service centre along with its network of 57 high street branches across the UK. The society's website is also being constantly developed and is becoming increasingly interactive. While focusing on traditional areas of business such as residential mortgage lending and retail savings, the society also provides financial planning through its subsidiary Leeds & Holbeck Financial Services. It also launched a credit card in March 2002 and opened a branch in Gibraltar to offer mortgage lending on the Rock and in Spain from this year.
Q: How is L&H positioned within the intermediary sector?
A: We are fully committed to the intermediary market and we offer an excellent proposition to our intermediary partners. This involves keenly priced, innovative products, competitive procuration fees and good service. As approximately 60-65% of our gross lending is produced via the intermediary market, the sector is extremely important to us.
Q: Do you deal with packagers?
A: Yes, on a limited basis. We need to satisfy ourselves that such a relationship adds value in terms of quality, efficiency and profitability.
Q: Who would be your ideal client?
A: We deal with the full spectrum of intermediaries including IFAs, mortgage brokers, life offices, networks, estate agents and mortgage clubs. The ideal partner is one that we can work closely with to provide quality volume business across our range of products on a profitable basis.
Q: What are the pros and cons of your service?
A: The society offers a unique 'mortgage promise' to its intermediary partners whereby we will pay an additional £100 if we do not deliver our published service standards. This has been well received by our intermediaries and further underpins our commitment to this market. We also give a 'decision to lend' (which includes a full credit search and criteria check) in 30 minutes, meaning that the intermediary has the decision when he needs it – at point-of-sale.
Q: What is L&H's share of the market?
A: It is difficult to quantify our share of the intermediary market but in 2002 we have produced in excess of £1bn of applications from this source.
Q: What incentives do you offer intermediaries?
A: Our procuration fees range from 0.25-0.35% for established partnerships. We offer attractively-priced products, competitive procuration fees and high service standards. This is supported by our 'mortgage promise', the approachability of our underwriting team, the flexibility and consistency of the decision-making process and the availability of a team of local development managers to assist our intermediaries.
Q: How do you envisage the intermediary market in two years' time?
A: Leaner and meaner. Forthcoming regulation is likely to result in lower numbers of intermediaries, with some leaving the market entirely, either due to escalating costs or the lack of willingness to become qualified. A number will decide to join larger groups who are able to provide added value in the form of regulatory, PII, marketing and training support etc. Whichever route they take, mortgage regulation will definitely have a major impact on everyone in the intermediary market including lenders. It will help to focus minds on the person who ultimately matters – the customer.
Q: Should mortgage packagers be authorised by the FSA?
A: There are a number of schools of thought on this and while we can see both sides of the argument we think the FSA has reached a fair compromise with its definitions in CP146.
Q: What effect do you think the MCCB's qualification deadline will have on the intermediary market?
A: It will undoubtedly result in a reduction in the number of intermediaries, although recent press coverage seems to indicate that we are seeing the expected last-minute rush to get qualified. By the time this article goes to press we may have a better idea of the actual impact but there is some concern as to how the industry and the MCCB will be able to identify unqualified and supervised advisers prior to MCCB registration in April 2003.
Q: What effect does L&H think the Basle II Capital accords will have on midto small-sized building societies?
A: The Basle II Capital Accords are not due to be introduced until 2006 and will not fully come into force until two years after that, so there is time for lenders to prepare for them. To get the most from the new Accords will mean significant extra investment both in financial terms and in ensuring that people have the right expertise. For smaller societies this could present a considerable burden at a time when all societies are facing up to various new regulatory requirements. For larger societies like ourselves, the Basle II Accords are likely to bring benefits as they should result in tighter pricing of mortgages which would also be to in the interests of borrowers.
Q: Is enough being done to convince the European Commission to exclude mortgage loans from the proposed Consumer Credit Directive?
A: Industry trade bodies and the government are making efforts to change the proposed Directive and it is imperative that this pressure is maintained. The current proposals would severely restrict the operation of the UK market which is more developed and complex than other European mortgage markets. It would be a backward step for UK consumers and would limit the choice of mortgages available by restricting product innovation (for instance, by making it impossible to offer flexible mortgages). In its present form the Directive is unacceptable to the UK industry and authorities and it is essential that strong representations be maintained to bring about changes.
Q: Do you support efforts for a trade body for mortgage intermediaries?
A: Yes, the society supports the efforts being made to form a single trade body for the intermediary market. We are all aware of the diversity of the intermediary market and it is essential that, as regulation draws closer, the intermediary sector has the ability to express its views on this and other issues that affect the market with one voice.
Leeds & Holbeck
Leeds & Holbeck is the UK's eighth largest building society with assets of £4.3bn and around 600,000 investing and borrowing members. The Society is based in the centre of Leeds. Founded in 1875 in the Holbeck district of the city, Leeds & Holbeck has operated from its present head office (pictured above) since 1930. The Society employs around 900 staff at head office, its Leeds customer services centre and in its UK branch network.