Regional lender with &#39no bull&#39 aspirations

Staffordshire Building Society

Staffordshire celebrated its centenary last year by launching a number of new mortgage products and introducing daily interest calculations and an online conveyancing service. From headquarters close to its flagship branch in Wolverhampton (pictured above) the society has masterminded the formation of two new subsidiaries – one to acquire sub-prime mortgage books and the other to deal with branch business.

Q: How is Staffordshire structured?

A: The society has 39 branches in the West Midlands area and writes mortgage business across England and Wales. Using the logo of a Staffordshire bull terrier and the strapline “All Staffordshire. No bull”, we have overhauled the mortgage product range in the last 18 months and re-engineered our approach to different niches within the market.

The society now not only takes on mortgage business through its bran-ches, via intermediaries and directly by post or from its websites, but it has also set up two subsidiaries – Jubilee Mortgages and Staffordshire Lending Services.

Jubilee Mortgages acquires mortgage books from other lenders, typically sub-prime business. Staffordshire Lending Services is a subsidiary set up at the end of 2002 through which the Staffordshire plans not only to channel its branch business but also mortgage cases where the society can&#39t help the customer – but where we can introduce the applicant to another lender. The society&#39s senior staff members include chief executive Bill Snaith and business development executive David Enoch.

Q: Which distribution channels has Staffordshire concentrated on and why?

A: Until recently the society focused on winning traditional mortgage business through its branch network and wide range of local brokers with occasional forays into direct business.

With its new structure, the society is being smarter regarding where it wins business. We are giving special attention to a few key relationships and a more consistent presence in the direct market, supported by developing online capability.

Q: How do you interact with the intermediary market?

A: The new structure still sees the Staffordshire getting around 50% of its new mortgage lending from intermediaries. This is supported by a bespoke website for intermediaries,, and by personal contact with our Midlands-based intermediary sales force and underwriters. This is supported by the absence of credit scoring in the society&#39s underwriting procedures.

Q: Who are your main mortgage customers?

A: The society writes mortgage business for anyone in England and Wales. With a mission to offer customers a wide range of excellent products and services, we have recently extended this range to include flexible and buy-to-let mortgages.

In January 2002, we were one of the first lenders to calculate interest daily instead of annually for all our new as well as our existing borrowers.

As part of keeping things simple and transparent for customers, the Staffordshire has its own fast-track free legal service and a relationship with which makes it easier for customers to move house or move their mortgage to the society.

Q: What is your lending strategy and are there any changes planned, going forward?

A: Having celebrated our centenary in 2002, the society is proud of its reputation in not wantonly encouraging its members to take on the high borrowing commitments associated with high income multiples. It has, however, made some prudent changes to lending criteria to accommodate market needs.

This strategy is supported by the recent improvements to our mortgage product range, new ancillary mortgage products such as a mortgage payment protection product with Paymentshield Ltd, careful extension into new channels and a regular presence in national and regional best buy tables.

Q: Do you accept packaged business?

A: Part of the move into new markets has seen the society offer bespoke products through Derby-based packager Members Mortgages. Recognising the cost savings that can be passed to members, as well as the better quality lending, the society is keen to expand its business in this market and will consider looking at partnerships which have the same approach. As the society learns more from its experience with Jubilee Mortgages, Staffordshire Lending Services and Members Mortgages, so other relationships and new forms of lending will be considered. But only after careful research and only where we can see that it can deliver clear benefits for members. The society is not big enough to be able to pursue these opportunities vigourously as the cost of failure is high. But Staffordshire is big enough to be able to look at each of these opportunities without having to specialise in just one of them.

Q: What do you think of the Mutual One concept?

A: The Staffordshire isn&#39t a member of Mutual One although we have close links with it. In 2001 we set up Staffordshire Financial Services as a separate subsidiary through which we sell AXA Sunlife investment, pension and life insurance products. This is working well for us. All our mortgage compliance is done in-house, AXA Sunlife picks up all our non-mortgage compliance. The Staffordshire experience is that customers understand what excellent value products and services are, as well as they understand friendly professional service which they can trust and big local community involvement. That&#39s what we talk about with members but the &#39M&#39 word is not often used. After all, when did you last hear people down the pub or on Eastenders talk about mutuality?

Q: How will forthcoming mortgage regulation affect smaller lenders like the Staffordshire?

A: We welcome increased regulation. The aim of statutory regulation is to make it easier for customers to understand more about their mortgage. Staffordshire Lending Services is part of our response to this and obviously we&#39re having to review all our pro-cesses and documentation but we&#39re keeping all our registered mortgage advisers in our branches. Having started early on this exercise, we don&#39t see the forthcoming regulation as a major problem. Indeed we think we&#39ve developed some expertise in this area that could help smaller societies.

Q: How do you see the mortgage industry changing in the next two years?

A: We anticipate change in two major areas. First, there&#39ll be even more choice demanded by consumers and intermediaries, albeit at possibly less competitive rates in the short-term especially if the economy gets tighter.

And second, there&#39ll be greater specialisation, possibly even consolidation, among lenders with some current providers changing character completely and some maybe disappearing altogether. The speed at which both of these changes take place will depend in part on changes in technology and in the regulatory framework.