The packager market is split at the moment as to whether satellite packagers can offer the industry any value. So, we’ve got two industry figures to fight out their corner.
Dale Jannels, sales and marketing director, All Types of Mortgages
Having reviewed the ongoing debates from various sources, I feel there is a wide mis-match in understandings about what a satellite packager is and what they do.
One view is that a satellite packager is a broker in it purely for the enhanced proc fees, leaving the brunt of the extra work for the lender or ‘host’ packager to carry out. I know of brokers that turned satellite packagers with just that belief, oddly enough I don’t know of too many lenders or host packagers that are happy with this scenario, so whilst it may be a perceived option for brokers, the reality should be short lived.
There are also organisations that appear to ‘satellite’ for more than one host packager. Having run satellite packagers for many years, I would suggest that any packager claiming to have over 100 satellite packagers, for instance, can not possibly control this area. And finally, there are those satellite packagers who believe they can get away with doing it purely for the mark up on a valuation fee! Once again, this may be the perception but the reality is somewhat different.
The other side is that there are genuine, hard working brokers looking to grow and enhance their business models – entrepreneurs looking to build and offer a packaging service and expand out to B2B business as well. Perhaps they don’t process a big enough volume to be accepted as a packager in their own right, but they are still a business looking to make a difference to the packager world.
It is this latter type of business, with which AToM seeks to work and develop a sound, long-term relationship. From our experience, there are enough of these quality type businesses to go round.
AToM carries out due diligence on every satellite we take on. We contract with our satellite partners to conduct minimum levels of business and exacting standards to be adhered to in packaging every case. We have rigid criteria for every case, in the same way that a lender has with us, and if the packaging is not up to scratch, an amount of the proc fee is subject to deduction. Lastly, we ensure that every case is sent to AToM, rather than directly to the lender, thus keeping complete control and highlighting any areas, which require training so that a top quality packaging service is always maintained. We also insist that all cases use the AToM panel valuers, thus ensuring consistency throughout.
This is a model that works now and will continue to work in the future. With most lenders currently reviewing and decreasing their primary packager distributions, I can see a growth in satellite packagers as they retain the continuity, either locally or by niche sector.
Roger Morris, managing director at em-, does not share all of Dale’s views.
The mortgage market has changed massively in the last few years and of course the last 12 months have seen the greatest changes of all. Looking back at mortgage day there was a scramble for the ever elusive distribution channels and the role of the satellite packager was never more apparent
At em- we have seen several brokers leave us to join a satellite packaging model. And why wouldn’t they? When times were good some packagers were offering up to 95% of the gross income of the case.
Lenders have now been talking about cutting the number of packagers they deal with for many years now with some already taken the jump; maybe they should start with reviewing and policing satellite packaging
Currently the packager is expected to police their satellite partners – but the harsh reality is that the number of deals they put through the door was key to the satellite relationship at the time and not necessarily the quality of the submissions. How would packagers be able to assign a resource to something that only makes them a small amount of profit?
As with all wars there will be many innocent victims, namely the brokers and the end customer. Surely the lender has some responsibility to them along with the packager. They should be asking the packager to justify each appointment both existing and new.
Alternatively, as with the Personal touch packaging model, the packager should take total responsibility for their satellites. The broker wishing to become a satellite must follow an extensive programme of training, as if they were new to the market (even though some may have been around for some time) as well as go through rigorous compliance checks. They also need to understand and portray the values of their parent packager.