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Sporting chance

Like the Ashes series, the market is tough but fair says Kevin Duffy, managing director of Hamptons International Mortgages. He talks to Barney McCarthy

The Ashes this summer captured the imagination of the whole country. Even those not usually interested in cricket were on the edge of their seats as England narrowly overcame Australia. The series drew plaudits from around the world, not only for the quality and competitiveness of the action but also for the sportsmanlike manner in which it was conducted.

Exemplary disciplinary behaviour is not something always associated with the dog-eat-dog world of the mortgage industry, but Kevin Duffy, managing director of Hamptons Inter- national Mortgages, says there are parallels to be drawn.

“There is the occasional bit of sledging in the market,” remarks Duffy. “But The Ashes proved that can simply make for competitiveness within which there is still a spirit of fair play.”

Although the mortgage industry consists of companies with varying market shares it is buoyant enough to support everyone, he says. And the Hamptons maestro adds that he enjoys a healthy relationship with his peers in London and other brokers nationally, stressing the importance of learning from other business models.

“We have borrowed some practices from my previous involvement at other brokers and like to think we have kept the good traits and dispensed with the bad,” he says.

Duffy embarked on his career in 1988 after graduating from the University of Surrey with a degree in English literature and sports science. His first foray into the financial services industry was at NatWest after joining its graduate management scheme. He spent seven years at the bank before realising the opportunities that lay elsewhere. He had a two-year stint at John Charcol before leaving to assist with the set-up of Savills Private Finance in 1997 as associate director of special projects.

In March 2000 Duffy incorporated Square Mile Mortgage Finance and launched it in July that year comprising five business writers. Duffy was approached in October 2001 by Hamptons with a view to setting up and developing an inhouse mortgage brokerage and so Hamptons International Mortgages was born.

Hamptons itself is a top quartile property agent specialising in homes valued above 500,000 and has 60 offices worldwide. While Hamptons International Mortgages only has two representative UK offices – in London and Bristol – its consultants can operate from any of the agency premises by virtue of the customer relationship management software it has in place. Duffy says the fact that Hamptons is an internationally recognised brand, plus the capital resources available from its parent group, have helped it open offices in Hong Kong as well as being a dedicated European broker with offices in France, Portugal and Spain.

The broker recently revealed partnerships with Key Retirement Solutions and Towry Law to strengthen its proposition. KRS receives 150 enquiries a month from people ineligible for lifetime mortgages and will now divert these cases to Hamptons International Mortgages. In return, Hamptons will source lifetime enquiries for KRS as it does not have a registered individual practising the discipline. The Towry Law tie-up came about when it decided its mortgage business was not core to its wealth management business. As a result, Hamptons will receive around 100 leads a week and remains in discussions about potential staff transfers.

The partnerships mean Hamptons will enter 2006 with 32 business writers and will reveal further introducer arrangements later in the year. Duffy also alludes to possible staff movements between brokers and uses a football analogy to do so.

“We are aware some of our competitors operate a financial year to December 31,” he says. “I would be disappointed if the January transfer window did not involve Hamptons International Mortgages.”

Waves were recently created in the London brokering community with the news that Square Mile Mortgage Finance was to leave Hamptons and become an appointed representative of Cobalt Capital. But Duffy is keen to play this down and says the split was at Hamptons’ instigation.

“With the associations we are developing with KRS and Towry Law, we reached a point where we had to prioritise the number of partners we have and the value they represent to the Hamptons group,” Duffy explains. “What this business requires to achieve its objectives is scale.”

He also says that, as with Towry Law, regulation has been a stimulant for some financial services practitioners to realise mortgages are not a priority area – something companies such as Hamptons International Mortgages have benefited from.

But while Hamptons International Mortgages has benefited from regulation due to Towry Law’s offloading of its mortgage business there are also pitfalls to statutory control. Duffy concedes Hamptons International Mortgages has taken advantage of the fact IFAs and small brokers do not have the capacity to handle general insurance business on top of mortgage cases but speculates as to the necessity for Financial Services Authority governance in the first place.

“I was never in favour of statutory regulation and said so at the time, when too few people were prepared to say it,” he says. “We had a mainly compliant market under the MCCB’s guidance and were subject to far better trading practices than comparable industries such as estate agencies and personal loans. The irony is that after all the millions of pounds the mortgage industry spent on becoming compliant, the typical punter has no greater awareness of their protection from negligent advice than before.”

Duffy believes that although the FSA has not yet uncovered any serious malpractice by mortgage lenders or made an example of anyone since it inherited responsibility for regulating the mortgage industry, punishments could be just around the corner.

“It will definitely come,” he warns. “If we have a revisit to the self-cert landscape and the area of greatest delinquency – sub-prime – I have no doubt there will be some hardship and punitive measures.”

Duffy also describes the increase in the amount of paperwork in the mortgage application process as “completely overcooked”.

Analysing lender offerings for brokers, Duffy expresses concern about the Abbey’s commitment to the intermediary market. He says if Abbey is forced to fit the mould of parent Banco Santander it may not keep its eye on the ball in terms of the broker channel.

“The minute Juan Rodriguez Inciarte suggested at the Mortgage Summit that the UK should adopt the euro I had reservations about whether Banco Santander can take Abbey closer to the market dominance of HBOS,” admits Duffy. “Abbey made inroads with its high net worth team, but it will be fascinating to see if it will be asked to fit the Spanish model of going direct to consumers. I’m not convinced that Abbey will establish itself further in the intermediary market.”

When not heading Hamptons International Mortgages, Duffy has a number of interests to help him unwind. As well as being a keen golfer and rider, he enjoys marathon running and plans another long-distance slog soon. After defeating John Charcol’s product director Walter Avrili in a mortgage head-to-head in 2003, the Hamptons supremo is keen to reignite the 26.2 mile feud.

“I saw him off last time with a modicum of training and he can bring it on any time he likes,” Duffy threatens.

Duffy also has a season ticket for Arsenal and jokingly cites manager Arsene Wenger as a major influence on how he tries to run his business. Duffy has two children – Grace, seven, and Luke, one – and lives near Weybridge.

Looking to the future, Duffy says the market has recovered from the distraction of regulation and will finish the year more strongly than it started it. He expects lenders who sat tight in early 2005 because their products weren’t sharp enough to contribute to a product fest before Christmas. Duffy also observes that the interest rate cut is starting to affect borrower confidence and that, oil prices notwithstanding, the market should be coming out of what he describes as a three-year property malaise by next spring.

Although Hamptons International Mortgages’ average loan size is 300,000 and it primarily deals with the upper end of the market, Duffy says it has been able to grow by not being over- discerning about the size of a client’s first mortgage and will continue to expand because of this.

As the market starts to bloom again, Hamptons International Mortgages goes from strength to strength. Having taken three years to recoup its start up costs it will finish this year with a strong profit and, with more affinity partnerships in the pipeline, will continue to be a force to be reckoned with.

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