A couple of weeks ago an open letter was sent to abbey from a group of IFAs despairing of the poor levels of service they were receiving on the processing of their mortgage cases.
Abbey responded by inviting them to a meeting with senior executives to discuss the issues. I am sure some in the industry are wondering why abbey has spent so much on rebranding when it doesn't seem able to get the basic management of its business processing right.
But this malaise is not restricted to abbey. Many of the biggest and most visible lenders in the UK suffer from a problem with service to the intermediary. As they try to reengineer their business to allow online processing to dominate they also appear to dumb down, downsize and centralise whilst at the same time advertising the best rates in the industry to ensure market share is maintained. Something has to give – and what gives is service from overworked processing staff who can't handle the volumes of applications let alone the phone traffic.
One lender recently confided to me that staff turnover is now so great – due to stress and long hours – that having sufficient numbers of well trained staff has become a real problem.
Talking to professional mortgage brokers in the UK it is apparent that many lenders are becoming increasingly disconnected from the realities of mortgage sales. Lenders' business development managers are only able to visit a few larger firms leaving smaller introducers to fend for themselves. In fact, over the past few months it has been easier to find some of the HBOS group BDMs in the processing centre than out on the road as, through the forced introduction new IT, service has gone into meltdown.
I wonder to what extent are lenders aware of the impact their service has on the advice that is given? One large South Coast introducer I spoke to excludes Halifax from his panel, communicating this to applicants in his terms of business letter. He refuses to deal with Halifax as he perceives its service to be so poor it costs him money each time he places a case there.
Other intermediaries are not so upfront with the consumer. I have regularly heard brokers say they will not deal with The Woolwich since Barclays took over. Indeed a show of hands at a recent roadshow saw around half the attending intermediaries agree that The Woolwich's poor processing through Global Home Loans had influenced their decision not to sell Woolwich mortgages to an applicant.
So while the FSA is regulating mortgage advice and procedures to ensure the customer receives best advice, it is overlooking one of the key issues influencing the sales process. Even if a product is the best choice for the applicant, if the lender in question will cause the introducer excessive work in trying to obtain the mortgage he may look elsewhere. This means the mortgage solution is being determined by lender service not lender rate.
So what characteristics typify the worst service protagonists? In Optoma's experience the best lenders are those in which senior management are close to the business. For example, at Amber Homeloans and UCB the focus is on working in partnership – from managing director to underwriter – not only with their packagers but also for broker business providing immediate, dependable lending decisions.
Corporate objectives obviously determine every decision a lender makes but how divorced from the shop floor are the decision-makers? A key issue to poor service is the presence of City analysts – the share price and the corporate need to maximise shareholder value. These considerations are great if you are a shareholder but what if you are a customer?
Corporate efficiencies seem to be most obviously manifested in headcount reductions and consolidation of activities, moving from distributed processing to a centralised operation, from real people to voice-activated phone systems and from paper to computer.
We all know that IT allows us to reduce headcount. One computer can do the work of 10 staff and online applications mean a lender can get the adviser to do most of the work by keying in the case. Some lenders pass this saving back to the broker in enhanced procuration fees but others don't – where is the fairness in that?
The worst service culprits have closed regional offices and invested heavily in online solutions. However, they continue to put the best products into the market and have not resourced accordingly resulting in introducers commonly being put on hold for up to 60 minutes just for an enquiry. One lender recently stated its phones were not being answered for two hours a day due to excessive phone traffic – and to improve service!
Cheltenham & Gloucester spokesman Len Evans believes personal service and local relationships are key to C&G's competitiveness. Brokers deal direct with the branch manager. C&G's desire to meet the needs of brokers and their customers results in great service at local branch level.
But so often service standards are not consistent, varying by channel, location and time of year. While that South Coast adviser will not use Halifax, Optoma's experience of the country's biggest mortgage lender is the reverse. We get fantastic service from Halifax which is accommodating in process and resource to the extent that we regularly receive remortgage offers in under 48 hours from application.
With the volumes lenders have to achieve it is inevitable that process efficiency will continue to be high on their agendas. They should, however, be aware that the simple things are the ones that have the most impact on brokers, especially answering the phone and being able to speak to someone who knows about the case. Lenders create brands that have values we want to be associated with. But this value can so easily be destroyed when service does not match either the consumer's or the broker's experience.
It's not always the lenders' fault
An intermediary could be forgiven for thinking that some lenders, particularly in the sub-prime market, don't actually want to lend – constantly shifting their criteria, changing requirements and being generally inconsistent.
But how often is bad packaging passed off as bad lender service, tarnishing the lender's reputation when the packager is really at fault?
If packagers insist on asking their staff to package for four or more lenders each it is hardly surprising that the lenders take the brunt of the blame – when actually the root problem lies with the skills of the packager.
Lenders also often complain that the brokers do not do enough to help themselves. The quality of applications submitted to many lenders is said to be inadequate resulting in inevitable delays, returned applications and a disservice to applicants.