Amid all the anniversaries this month the collapse of Lehman Brothers, 9/11, 10 years of Mortgage Strategy it’s easy to forget that it’s been just three years since Lloyds TSB swallowed up HBOS.
Lloyds Banking Group collectively is still the UK’s biggest lender. Its market share has slipped slightly in 2009 it completed £34.7bn worth of business, giving it a 24% market share and in 2010 it completed £30bn, a 22% market share. But when you consider that 2009 was just after the two companies were combined, it’s hardly surprising it dipped. What has shifted in three years is market sentiment. At a lunch last year a network head marvelled at how much had changed in the lending market in such a short time.
“If you’d told me three years ago that the lenders at the top of the pack would be Abbey and Barclays and at the back would be Halifax, I wouldn’t have believed you,” they said at the time. “It used to be the reverse.”
We work with product teams to bring the best proposition to brokers and we want to continue doing business through them
What they were expressing was reflective of a wider market sentiment among brokers.
HBOS brands Halifax and BM Solutions were the only two to survive as Lloyds Banking Group merged the mortgage divisions of HBOS and Lloyds TSB. But as the biggest high street lender it has also needed to ensure its direct operations attract good amounts of mortgage business.
So the likes of dual pricing and Lloyds group’s strategy of removing brokers from its panel have provoked brokers’ ire.
Where once the lender could do no wrong, over the past year brokers have regularly left comments on Mortgage Strategy Online heavily criticising it.
That said, Halifax has addressed this by increasing the head count of its intermediary sales team by 50% a clear sign of its commitment to the broker sector.
Lloyds staff say that with the company’s new chief executive Antonio Horta-Osorio, who took over in January this year, there’s a greater focus on intermediary distribution.
Horta-Osorio’s previous firm Santander transformed the reputation of its broker arm Abbey for Intermediaries in just under a year, so could Halifax be looking to do something similar?
At the beginning of 2011 it embarked on a series of forum events with brokers to gauge their views on how the lender can do better. During the past nine months it has held broker forums in London, Glasgow and Birmingham where brokers could talk about whatever they wanted.
Ian Wilson, head of sales at Halifax Intermediaries, says the key message to come out of these meetings has been that brokers are hungry for consistency.
“The feedback was that people want to deal with us,” he says. “We have been through a period when perhaps there has been a lack of consistency with decision-making. We have had backlogs in our processing unit because we’ve taken in good levels of business and that has had a knock-on effect.
“We also had a turnover issue with regard to staff, all of which we’ve been working on.”
Wilson himself has certainly been a consistent presence within Halifax. He gained employment straight from school at his local Halifax Building Society, as it then was, in 1982.
“I knocked on the door of the Halifax branch in Union Street Aberdeen, asked for a job, didn’t get one, wrote back two months later and they said they had vacancies that was me in the door,” he says. “Wide lapels and white socks started my career off and I’m in my 30th year with the company now.”
After a 10-year stint in its branch network, in 1993 he joined the mutual’s intermediary business as a BDM in Glasgow. Another 10 years on, during which Halifax demutualised and merged with Bank of Scotland to become HBOS, he became regional sales manager, then national manager in 2005 before his current position in 2007. Perhaps second only to the ubiquitous Howard who has plagued its television advertisements, this man knows Halifax.
A moveable feast
But while brokers seeking consistency is well and good, that’s difficult to achieve when so much about the way Halifax does business has changed on the product side.
Over the past nine months it has made a number of changes to criteria. There have been restrictions on interest-only, its income verification policy and the documents it will accept.
In July it axed vendor-gifted deposits for private sellers which prevents buyers receiving a cash incentive from a private vendor.
And in August Halifax revealed that it was pulling its retirement home plan, an intermediary-only scheme designed for the over65s that allowed customers to borrow up to 75% of the property’s value.
The reasoning behind the axing of gifted deposits was that the true purchase price and valuation of the property may be distorted. This results in the incorrect LTV being calculated, which in turn could lead to customers being offered the wrong products.
On how big a problem gifted deposits had become for Halifax, Wilson says it has to look at any sector where the company appears to be taking in a large share of business.
“When it becomes apparent we’re doing that it flags up potential concern for us and with gifted deposits there was potential they could be used for something other than the purpose they were intended for,” he says.
On the subject of the retirement home plan he says it was a similar situation, with the lender in a niche position and taking a large part of its business through that product. Another problem was the fact the product had been going for a long time and was no longer being used for its original purpose.
“It’s been around as long as I can remember and was originally introduced with a view to helping people purchase a property for their retirement a retirement home,” he says.
“Obviously as the market changed, it was classified as a lifetime mortgage and was an opportunity to release funds from a property rather than to allow people to purchase their home for their retirement. It was being used differently.”
With both products dropped, there was mixed feedback from brokers some castigated the lender for removing both products but others praised it as taking a logical step.
Wilson concedes that a mixed response has been the dominant characteristic of the recent changes Halifax has made.
“In terms of the gifted deposits we got some positive feedback about that and with the retirement home plan, the most feedback was people saying they were surprised it took us this long to change it,” he says.
But he says neither product was brought up in the recent broker forums.
“There’s an understanding within any organisation that policy and products will change,” he says.
But surely dual pricing, which has dominated the criticism levelled at a number of lenders, is still an issue?
There was a comment left on a story Mortgage Strategy wrote on May 24 about the extra documentation Halifax now requires for interest-only. The writer, Craig Taggart, was welcoming of the documentation changes but found Halifax’s products too expensive.
“No problem with the extra documentation being asked for,” Taggart comments. “I do have a problem with any broker using Halifax as it is effectively bad advice due to the fact the client can get a better rate direct. When is Lloyds group going to admit it doesn’t want intermediary business?”
Strong words but Wilson says that in the three forum events he went to recently, attended by around 18 brokers in total, dual pricing wasn’t mentioned once.
“I was pleasantly surprised but there is an appreciation that they are largely different markets and we’ve got to be competitive in the high street that might mean a different product set,” he says.
“The other thing appreciated is that there is often dual pricing in favour of brokers, which is usually missed. We have some exclusives from time to time which are available to brokers and not direct, and that’s a good position to be in.”
Wilson works closely with the company’s product team to come up with attractive products and concedes that the market is competitive at the moment.
“There will always be constraints of one nature or another, be it funding or otherwise,” he says. “We work with our product teams to bring the best proposition to brokers and we want to continue doing business through them to the share that we’re doing at the moment.”
He says he’s unsurprised by the negative comments and that everyone is entitled to their opinion, but he sees Halifax as being a lender that offers more than just cheap rates.
“We take all feedback seriously,” he says. “Equally, it’s nice to see a balance I don’t think we have to go far to prove Halifax is committed to the broker market. I guess the simplest example of this is the product transfer and further advance that we offer.
“There isn’t anyone in the market near us as far as that transaction goes. There’s an online system brokers can access with the required information to make the case happen and brokers control what is a simple transaction.”
But it’s not just Halifax’s products and criteria that have been subject to major change as those working within Lloyds group have also faced an uncertain period.
Since Lloyds TSB and HBOS were merged, some 26,000 jobs have been lost within the combined group. In April it was confirmed that Wilson, along with BM Solutions’ head of sales Phil Rickards and head of national accounts Maria Harris, would be retained.
All three had to reapply for their jobs following the announcement in March that Lloyds group would be scrapping its Cheltenham & Gloucester brand through brokers.
Wilson admits that one of the biggest changes the market has seen has been in the team itself, returning to his favourite topic of conversation “the people who work for me”. Wilson’s team at Halifax Intermediaries has increased over the past year from 34 to 65.
“We now have 52 BDMs, a team of telephone BDMs and eight regional managers, which is the largest team we’ve ever had,” he says. “Over the past 18 months that’s up from 34 which is a 50% increase in the sales force we have out there.”
But while a bigger team is undoubtedly better, it has meant that in some cases it has had to start building relationships afresh.
“There’s always a learning curve,” says Wilson. “What came out of the forums is that people are delighted we have more face-to-face representation but it’s clear we’re at the start of those relationships and building them again.”
He argues that the staffing changes, including him having to reapply for his job, did not rattle brokers. “They can get most of the information they need to continue dealing with any lender that goes through a change like that,” he says. “It’s unsettling for everyone involved but it is what it is it’s one of the things we live with at this moment in time. Our guys have come through the other end and they’re now marching the streets doing what they do best.”
It’s clear Wilson is a hands-on manager, like his football idol, fellow Scot Alex Ferguson, who he has followed since Ferguson’s successful run managing his home side of Aberdeen between 1978 and 1986.
He is keen that his army of BDMs are motivated to be the best at what they do.
“After all my years in this business, that’s what I’m about and that’s what I want Halifax to be about,” he says. “We’ve got to make the 65 people who are on the streets helping brokers do business the best they can be at what they do
“If their desire is to be a career BDM we need to help them be the best they can be and if they have aspirations in other areas we’ll help them with that too. I’m all about helping people get what they want to get out of their career and as a result brokers get better service from Halifax.”
Brave new world
So with a new team in place Halifax is now looking to improve its processes. In terms of turnaround times Wilson says 65% of cases go to offer in 14 days, although he contends it’s just as important that cases are dealt with correctly as they are quickly.
And while it seems unlikely we’ll see an end to the ’computer says no’ culture any time soon, Halifax is looking to bring in processes whereby clients can talk to a member of staff rather than a computer programme.
“Interestingly, the people we spoke to at our recent forums were far more interested in being able to talk to a human being that anything else,” he says.
“They found people to be a more reliable source than any other medium we’ve used. But we’re piloting a live person through Halifax’s premier unit and that seems to be going well.”
Communication in general seems to be the big thing Halifax has improved. A year ago Mortgage Strategy was deluged with complaints from brokers who had found themselves kicked off Lloyds group’s panel. Judging by the anguished letters from brokers excluded by the UK’s largest lender, their chief complaint was the lack of communication about what they had been censured for.
However, on that front at least it’s been relatively quiet. Is this a sign that the lender is finally letting brokers know what’s going on?
“Communication is a big thing,” says Wilson. “In any process such as the one you’ve just mentioned, we start a dialogue with the broker concerned early on if there’s any dispute and we’ve got robust processes to make that happen.”
And to return to the negative comments by the network head that Halifax as a brand had fallen off its perch, at least by reputation if not in lending volumes, unsurprisingly Wilson argues against that.
Despite all the changes it’s been forced to make, from axing products to tightening interest-only criteria, he says the majority of brokers recognise the lender is committed to supporting them.
“I believe the lion’s share of the broker market remembers these things when they’re having to make their minds up about some move we’re making,” he says.
“Generally they take a balanced approach and realise we don’t take the decision to move on certain things unless there is a sound reason to do it.”
Clearly Halifax will continue to divide brokers and for many it will be like Marmite they either love it or hate it. But that’s the case with all lenders that have large direct operations or are constrained by funding.
It’s worth remembering that and the massive changes Halifax has gone through during the past three years. With the difficulties HBOS faced in its commercial division, it’s astounding that Lloyds TSB was willing to take it on. And the fact it is keen to listen to brokers’ gripes and improve its service is a step in the right direction.
Ian Wilson CV
Born: Aberdeen 1965
Education: Hilton Academy, Aberdeen
Employment history: 1982 Started work at Halifax Building Society branch, Union Street, Aberdeen
1982-93 Worked in Halifax branches
1993 Moved across to Halifax’s intermediary side as a BDM in Glasgow
2003 Became regional sales manager for Scotland, North East of England and Northern Ireland
2005 National sales manager
2007 Head of sales at Halifax Intermediaries
Hobbies: Football, golf, married for 15 years, father of three boys.
Played semi-professional football for Peterhead, just north of Aberdeen.
Supports Aberdeen, from the Alex Ferguson days when they were 1983 cup winners. Watches Manchester United now.
Favourite film: The Shawshank Redemption and the Michael Douglas classic of one man’s mental breakdown with an Uzi, Falling Down.
Favourite Books: From a business perspective First, Break All The Rules by Marcus Buckingham. In terms of fiction, The Dark Half by Stephen King.