The industry’s been working hard to implement standards to comply with the Financial Services Authority’s Treating Customers Fairly initiative but what controls are packagers now required to put in place for satellite packaging and how is this documented from a packager or a lender perspective?
What are the different models for satellite packaging in the market today and how might these change moving forward? Is there a minimum or maximum number it is feasible to offer this facility to, and is technology a driver for this process? What is the next step beyond satellite packaging?
Bill Dudgeon is managing director of DB Mortgages
Doug Hall, sales director, 3MC
Satellite packaging is becoming an intrinsic part of the intermediary mortgage market, with a number of national packaging firms offering solutions.
The word satellite implies dependency but satellite packaging is far from that and should be considered a partnership rather than one firm depending on another.
Satellite packagers should be seen as mortgage distributors as well. They can be considered in terms of two types of business models – packagers that already package, perhaps on a small scale, and intermediaries producing volume business and looking to enhance their own business models with a more diverse market and fresh revenue streams.
Packagers that offer the satellite approach should have a well defined control process, possibly with contractual terms between themselves and their satellite companies.
They should also provide their satellites with added benefits, such as access to online technology or exclusive products.
Ian Balfour, sales and marketing director, Solent Mortgage Services
Satellite packaging has been with us for some time. We have a good spread of satellites in the market, both business-to-business and business-to-consumer, which are able to offer products and services that brokers would not ordinarily have access to.
The problem for the industry is that responsibilities are not being met in a lot of cases. What tends to be forgotten is that living as we do in a regulated world, our relationships with lenders are not just guided by the volume of business we generate – we have a regulatory responsibility to ensure that all our satellites are up to the job of packaging in a way that is consistent with the high standards that our lenders expect.
Satellite packaging will come under scrutiny unless more companies offering satellite facilities take the trouble to ensure that their satellites are doing the job compliantly to an agreed standard, that their systems and processes are in line with the hosts’ and that there are clear and definitive facilities to audit business.
Tristan Pile is head of sales and marketing, Complete Mortgage and Loan Service
Satellite packaging adds value to the distribution process for both main and satellite companies.
It gives the latter more control over timescales and this helps them form stronger relationships with their clients and introducers. At the same time, the main packager can do increased volumes of business without having to grow its employment base, which strengthens relationships with panel lenders.
We have a satellite packager manager who oversees the whole process. References are taken and an application is made to the lenders for whom the candidate will package. Lender training follows and all satellite packager cases are subject to a quality control system. The relationship is formalised in a satellite packaging agreement, which also sets minimum business volumes.
We don’t operate a prescribed number of satellite partnerships. Each satellite chooses the lenders it wants to package for. The next stage is franchising.