The Jerez Mortgage Summit 2006 got off to a heated this week start with an opening debate between lenders and introducers on the future of the intermediary mortgage market.
Chaired by Kevin Duffy, managing director at Hamptons, the panel consisted of BM Solutions Tim Hague, Bank of Scotlands Charles Haresnape, sales director of Park Row Kevin Patterson, and last but not least Simon Jones, director of Savills Private Finance.
The discussions opened with direct channels versus intermediaries, with lenders urging the latter to branch out into different product areas beyond mortgages through cross-selling. However, brokers later hit back at lenders who claim ownership of clients and do not provide ongoing information to enable them to retain the client.
This was one specific issue that got Chris Cummings, director general of the Association of Mortgage Intermediaries, hot under the collar. He accused lenders of using the Data Protection Act as a defence, but pointed out that brokers have every right to access ongoing information about their clients.
The debate then moved on to proc fees with brokers calling for unified fees across the board. However, Haresnape disputed this and claimed technology and other factors had to be considered when considering proc fees.
Both sides agreed that retention fees are essential for the survival of the market, with Accords managing director Linda Will saying that business levels have increased by 100% since it introduced retention fees and that these sorts of initiatives offer a long-term opportunity for lenders.
However, Hague was quick to point out that many of the clients it sees returning to its product come through with a different intermediary.
Brokers questioned why online cost savings hadnt improved the rate of proc fees they receive. However Hague retaliated saying that despite submitting cases online many brokers continue to telephone afterwards to check if they have been received.
Lockhart Bruce, managing director at Opus, questioned if packagers have developed systems that send confirmation emails back to the broker, why lenders with their large budgets cant do the same.
Haresnape says improved case tracking is something BoS is currently working on.
Haresnape then called on brokers to charge their clients a fee for advice. He says: I cant understand why brokers are not charging the client a fee. It is a professional service they are offering and in any other profession they would charge for giving advice. It seems to be an undeveloped area.
Duffy warned that lenders were uneasy about the 75:25 balance between intermediary and direct business, and some would be looking to take back some of their market share within the next few years.
However, the lenders agreed that despite the likely consolidation of the network sector, there would be an ongoing role for both networks and packagers in the future so long as they adapted to the changing market.
The debate concluded with one delegate asking Haresnape if the reason HBOS paid the Openwork appointed representatives a 0.1% more proc fees than other brokers was related to its million pound investment in the network. Haresnape declined to comment.
Prior to the debate, delegates enjoyed the RBS Intermediary Partners barbecue on Tuesday night whilst watching the World Cup. Despite only managing a draw and Spanish commentary, delegates enjoyed their first night in Jerez. One lucky intermediary even won a plasma TV and signed England 1966 team photo.
Jonathan Burridge, managing director of Quantum Group, drew the lucky ticket the correct time for the first goal after Joe Cole scored in the 34th minute for England.