BDMs provided a lifeline for brokers as the Mortgage Market Review made its presence felt so what should their role be in the post-MMR world?
Prior to the credit crunch, lenders’ business development managers had a reputation as product pushers and a knock on the door from your BDM generally meant they were there to sell you their latest products and drum up some business.
In recent years, however, the role of the BDM has evolved from that of a salesperson into an educator.
The Financial Conduct Authority has stated that rate and affordability are king when it comes to choosing the best product for a borrower, meaning a BDM’s role can no longer involve the hard sell.
So what should the role of a BDM be in the post Mortgage Market Review world? And will a visit from your local BDM soon be a thing of the past as lenders increasingly invest in telephony and virtual BDMs?
Banned From offices
The role of a BDM is largely undefined, due in part to its changing nature over the years. Brokers’ doors were always open to BDMs prior to the credit crunch and likewise BDMs were always eager to visit brokers.
The relationship became less amicable in the days succeeding 2007 when dual pricing and restrictions on lending came into play.
Paradigm Mortgage Services partner development manager Christine Newell says as lenders started to withdraw from the intermediary space and inflict a daily/weekly change in lending criteria and product ranges, BDMs were being pulled in all directions.
“BDMs needed to be able to manage relationships that had been strong pre-crisis in a very different way to how they had to manage them in the past,” says Newell.
“The good ones maintained contact and didn’t take things personally when broker firms banned them from entering their offices due to such things as their policy on dual pricing.
“They also had to become a walking bible on their company’s underwriting and lending strategy as lenders began to introduce quality measures to which the broker had never been subjected to in the past,” she says.
The aftermath of the credit crunch also saw many brokers being removed from lender panels. It was often the BDM who was in the firing line when this happened.
“The relationships that a BDM built pre-credit crunch were being tested to the limit,” says Newell.
As lenders started to shed staff and cut costs, there became less of a need for BDMs, which in turn meant many found themselves being assigned to different roles within the lender.
“Quite often you would hear a broker say that his BDM had gone on the missing list and never returned calls, as many BDMs were pulled-in to head office to help service the pipeline, or were reposted to other duties,” adds Newell.
Stonebridge Group’s director of business partnerships Paul Nye believes some of the BDM’s influence has lessened over the years.
“Prior to the credit crunch there were more BDMs than we have in the market now and ostensibly they were a much more sales-focused bunch,” he says.
“Their primary role was to help advisers understand the sales opportunities that existed with their lender and they took them through the process of how to present business in the best way.
“Post-credit crunch, with tightening of lender criteria, there are less BDMs available to advisers. As a result of this, their job is far more about relationship management – this tends to manifest itself in explaining changing lender criteria and ‘fire-fighting’ on cases.
“I would say there has been a considerable shift and there is no longer a real development focus and therefore the influence of the BDM has diminished.”
However, Countrywide’s financial services director Nigel Stockton believes the credit crunch has led to a better breed of BDMs.
“The BDM focus has shifted from sales activity around product and price to a role that has become a more professional sales support role,” he says.
“The quality of BDMs has generally improved since the credit crunch and this is something that is likely to improve further as automation takes out the short duties and replaces them with knowledge and value imperatives. There will be fewer, more expensive and more relevant BDMs,” he adds.
Getting it right first time
So what should the role of BDMs be going forward and what makes a good one?
“It is very easy to get a good name as a BDM,” says Newell.
“The easiest thing to do to be considered a good BDM is to return a call in a timely manner and to follow up on any actions. The most common complaint is not being able to get hold of a BDM.
“The second thing is to be very knowledgeable of the lender’s own processes, underwriting and procedures and to be able to communicate these in a way that the broker can understand and relate to,” she says.
Mortgage Strategy’s first quarterly lender ratings feature, which was published last month, highlighted the difference a good BDM can make when it comes to placing a case. Many of the panel members commented that a good BDM can often make up for weaknesses in a lender’s proposition, such as poor service.
Nye says good communication skills are a must for a quality BDM.
“Communication is key, as is the quality of the feedback they deliver – it needs to be fast and accurate. They need the ability and power to be able to get involved on those priority cases that are ‘sticking’ in the underwriting department – the top BDMs are still able to do this,” he says.
Nye says poor BDMs basically wash their hands of the more difficult cases and say there is nothing they can do to help.
“This is incredibly frustrating for advisers and there will be consequences as they will either not look to support that lender in the future, or escalate any issues to the national account manager in order to try and get support,” he adds.
Stockton believes traits such as availability and knowledge of their product range are now hygiene factors, what is more important he says is BDMs being able to assist in making sure brokers get an application right the first time, especially given that lenders are now linking proc fees to the quality of applications.
“BDM’s are not case checkers or case progression chasers apart from in the most extreme of circumstances,” he says. “All major lenders have invested in telephony and telephone BDMs to cover this.
“BDMs should instead be the key providers of knowledge and support with detailed understanding of lending criteria, unique selling points and a critical understanding of affordability – particularly post MMR,” says Stockton.
More important than this, in his view, is that they have knowledge of the quality metrics that the lender is operating within.
This is especially prevalent given that both Halifax Intermediaries and Santander now award higher proc fees for better packaged cases.
NatWest intermediary Solutions head of sales Mark Bullard says its BDMs have played an integral part in making sure its cases are packaged correctly.
“I see the relationship between a BDM and their broker as interdependent. If both are to be successful in their business objectives they will need to work together,” he says.
“It almost goes without saying that a BDM has to have a really good product knowledge, but it’s the depth of knowledge of the intricacies that can often make or break a deal.
“They can also provide great value to brokers by giving them precise information on how to correctly package an application so that an accurate and quick lending decision can be made,” he says. “For instance on buy-to-let, helping the broker to include information such as the property type and quality, details on rental voids and the type of tenant all help build a true picture of the application which will enable a speedy decision to made, avoiding the need for to-ing and fro-ing requesting additional information.”
Bullard says getting applications packaged right first time has been a key focus for its business over the last two years.
He adds: “We have been hugely successful in significantly improving the percentage of correctly packaged applications we receive thanks to the work our BDMs have carried out with their brokers.”
De-coding the MMR
BDMs have not just had to be a walking user guide for lenders’ criteria and product changes over the last twelve months, but have also been responsible for relaying lenders’ affordability changes in light of the MMR.
“BDMs have had to be able to understand and interpret new industry regulations and requirements, such as the MMR, and integrate them into their day-to-day processes,” says Bullard.
“The greater focus now on raising industry standards and qualifications has an impact on BDMs’ credibility. We’re aiming to have all of our BDMs qualified with CeMAP 1, 2 and 3 – the same qualifications that their brokers have to have. Many of our BDMs have grasped the nettle and got their full qualifications already,” he says.
Precise Mortgages managing director Alan Cleary believes the MMR has not just added to the day-to-day workload of BDMs but has been the catalyst that has changed the way they operate.
Precise does not have BDMs in the traditional sense and instead has a sales team, due to the nature of its specialist products and only selected brokers selling them. Its sales managers focus on industry events where they can see lots of brokers simultaneously and can speak to the ones who have an interest in specialist mortgage products. It also attends events such as distributor roadshows and the Expos.
“If you look at the push from the regulator, everything it is doing is about trying to make lenders compete on product pricing and service, it’s trying to kill off brokers doing business with lenders based on relationship,” he says.
“It has basically said it does not want lenders to give brokers any form of inducement to sell their product but to instead make the product better.”
In January this year, the FCA published its final guidance on adviser inducements after it found some providers offering extravagant hospitality and exclusive distribution arrangements that were creating conflicts of interests.
Cleary says in light of the regulatory changes a BDM’s role needs to change to that of an educator.
“A BDM’s role has become more about educating brokers on how the product works and when it’s suitable to use it, not about a product push and being in the broker’s face saying ‘sell my product’,” he says.
But has the message reached brokers yet as to what lenders’ BDMs can be used for?
Leeds Building Society’s general manager of business development Martin Richardson says not.
It refers to its BDMs as regional development managers and it is their job to develop business at broker level, inform, educate and support the brokers’ activities and enquiries, and act as the link between its processing departments.
But Richardson says its RDMs are not always utilised in the right way.
“Brokers tend to use RDMs to resolve issues or as a last-minute information source,” he says.
“RDMs are a great education source and can help brokers’ businesses run more smoothly but brokers need to spare the time to meet and work with RDMs, who are willing to give much more support. Brokers need to see RDMs as a link to lenders and as a source of training and support.”
John Charcol’s senior technical manager Ray Boulger says the broker and BDM relationship is a two-way street.
“It’s a chicken and egg situation,” he says. “We will say to a new lender that its BDM needs to invest some time in our office. It won’t pay off straight away, but it will once the BDM has been coming in for some time and builds the brokers’ trust.”
As lenders try to streamline their businesses many are starting to invest in telephony or virtual BDMs to help solve the shortage of BDMs on the ground – but can a telephone call ever replace face to face contact?
Three years ago, NatWest Intermediary Solutions introduced its LiveTALK facility – a broker online instant messaging service, which answers questions from brokers about issues concerning applications before they are submitted.
The lender has also recently created a new phone-based business development manager team and appointed four new BDMs.
Bullard says its LiveTALK service has proved to be popular among brokers and it has continued to increase its manpower and extend opening times.
“We now have a team of 15 sales support staff on LiveTALK dealing on average with 12,000 conversations each month,” he says.
“We already know that a mix of face-to-face and virtual contact is required today to make sure that brokers get the service that they need.
“For our phone BDMs, I would expect the use of video conferencing with their brokers to become more commonplace in the near future. And that’s not to say they are desk-bound all year. Most of them will go out and visit a selection of their broker panel each year to grow the relationship,” he adds.
Aldermore Mortgages is another lender which will be investing in telephony based BDMs in the near future.
Its managing director Charles Haresnape says it also plans to introduce a form of live chat next year.
“We have an equal split of both field based and telephony based BDMs who partner up effectively,” he says.
“In each of our regions we offer brokers both telephony and field based BDMs and it is really their choice, as what suits one may not suit another.
“Next year we will be introducing a form of live chat – not instead of field based BDMs but to supplement them,” he says.
Despite this he says as a percentage it will see the biggest increase next year in its phone based BDMs.
Whilst virtual or phone based BDMs can expand a lender’s geographical reach, they are no replacement for face-to-face assistance, something which brokers hope lenders continue to invest in, just as much as their technology led plans.
Nye says the introduction of the MMR highlighted some lender and BDM weaknesses and if anything, BDMs need to work more closely with brokers, not more remotely.
He says: “It took BDMs time to get up to speed with the requirements of the MMR and the impact this had on product criteria. The better quality BDMs and lenders managed this process, worked their way through it and continued to provide the necessary levels of service.”
But he adds: “Post-MMR it’s fair to say that BDMs need to get better at knowing their broker customer. Being telephone-based and under-resourced is clearly not going to help them in that regard so one would hope lenders recognise this and begin to make the necessary changes – this will probably not be a quick process for some.”
Boulger agrees and says having a BDM in the office as opposed to speaking on the phone can make a real difference.
“Whilst one can pick up the phone, if you want to discuss a case in more detail and show the BDM some documentation, it’s really helpful to have someone in the office and human nature being what it is – if you have someone in the office that you can speak to that increases the likelihood of you using that lender,” he says.
“The NatWest live chat system is good because you have a written record, but from a lenders’ perspective they need to have different strategies for different firms. With a firm like ours, a BDM can come into our London office and see 50/60 different consultants in one visit. Going to an office where there are one or two consultants is a much less cost effective use of their time, so I they need to have both options.”
Simplybiz Mortgages chief executive Martin Reynolds says telephone based BDMs can add value if they are proactive, rather than just a call centre.
“If you try and call a BDM on the road they probably won’t answer and they probably shouldn’t really, because they will be busy,” he says.
“It’s good to have a BDM come into your office and talk through a case, but if you need a quick answer a telephone based BDM can provide this.
“Some of our bigger firms are quite happy not seeing a BDM and have actually asked for the telephone based BDMs,” he says. “A number of our brokers feel they are experienced enough, understand the lenders and their criteria, and just want somebody on the end of the phone to answer the odd query rather than someone showing up every five or six weeks for an hour,” he says.
Despite this he believes there will always be a place for field based BDMs.
“There are always going to be events and roadshows that need doing and team meetings for BDMs to go, but I do think their role will keep evolving over time as lenders’ technology changes,” he says.
There is no doubt that the role of the BDM has changed considerably since the days of product pushing and so has the mortgage market. In the boom days it was all about volumes and in some cases it was the job of the BDM to get as much business through their lenders’ doors as possible.
As the mortgage market moves away from a culture of unattainable targets and hefty bonuses these days are gone and the role of the BDM has become more important, with the good ones providing a lifeline for brokers during the MMR.
A good BDM can often make all the difference when it comes to submitting a case, but the general message from brokers seems to be that there are not enough of them and can be hard to reach. Whilst lenders are trying to tackle this by investing in phone based and virtual BDMs, these will not be the answer for everyone.
The message seems to be that if lenders want to increase business and productivity among brokers, the first place to start would be by boosting their BDM presence across all channels.
Matthew Martin, London BDM, Halifax Intermediaries
Since joining Halifax as an intermediary call centre operative 10 years ago, I can safely say that I have seen the role of a BDM evolve from a product advisor to an all-round specialist. My job is ultimately about making it easier for brokers to do business with us and arming them with the right information so they can support buyers through the homebuying and remortgage process.
As a BDM I am an external face of the company, but there are an array of support functions that are set up behind the scenes. These include a mortgage processing unit providing updates on cases, technology, panel and procuration fee support service teams. Within this vast framework the role of the BDM is to be a facilitator, to help brokers to get their queries answered quickly and efficiently.
The role of the BDM has always been diverse but has now moved away from being one solely focused on speaking to brokers about products to a more proactive role focused on improving the quality of business being written. It’s now about providing more support than ever in terms of criteria being available on the website, case updates being available to brokers by both email and online and helping brokers to get any other enquiries answered.
There is no doubt that the transition period pre and post the MMR has meant that I, and other BDMs have spent and continue to spend an increasing amount of time helping brokers navigate new systems and processes.
The biggest challenge is getting the balance right between getting out and about to meet brokers and also being available on the telephone to support their enquiries and get back to them quickly.
It is also important for us to keep up to date with changes across the market and it does feel like there have been a lot already in 2014.
An important part of what BDMs do is discuss new business enquiries with brokers and, at times, it would benefit all of us if we had more discussions prior to applications being submitted. No single application is the same, therefore by talking to a BDM as early as possible, we can provide advice on any flexibility of criteria or any nuances on niche or specialist propositions that may help the application progress much more smoothly.
The message I would leave brokers with is that we are here to help you and are happy to provide support around best practice and improving business quality pre application.