BSA Conference: Countrywide CEO accuses brokers of holding lenders hostage

Grenville Turner, group chief executive officer at Countrywide, has welcomed the fact that half of mortgage lending is done direct and accused the broker marker of effectively holding lenders hostage in the run-up to the financial crisis.

Turner gave a presentation to delegates at the Building Societies Association annual conference in Manchester today outlining that around 50% of mortgage business currently being generated comes from the direct channel.

He says: “We’ve seen a change in direct mortgages and I think that’s a good thing so that lenders shouldn’t be held hostage by intermediaries.

“There should be a balanced market where consumers are able to get advice and equally where lenders don’t become overly dependent on that source of business.”

When pressed Turner says that between 2005 and 2007 a significant majority of mortgages were being arranged by brokers which gave them too much influence over lenders.

He says: “The power that intermediaries held to influence lender decisions was probably in excess of where it should have been.

“What we needed to move to was a situation where the intermediary sector is important and healthy and encouraging sector, but not necessarily a dominant one and certainly not to the level that they can hold influence over the lenders.”

He adds: “I’m all in favour of an extremely healthy adviser sector – I would be because I have 750 business writers who are intermediaries – but I think a healthy sector is one where this is a sensible balanced relationship between the lender and the intermediary and the consumer. And I’m not sure that balance was there in 2005 and 2006.”