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HSBC set to enter the broker market for the first time

HSBC is to make a shock U-turn on its distribution strategy by entering the broker market for the first time.

From 6 October the direct-only lender will begin distributing through Countrywide, with which it already has a tie up for valuation work.

While it will launch with just one intermediary partner, it plans to distribute through a wider pool of brokers in the future.

Initially, the lender will offer a reduced range through Countrywide but will eventually open up its entire range to Countrywide ARs. It will offer loans up to 80 per cent LTV at launch.

The lender says it will not dual price.

Speaking to Mortgage Strategy, HSBC head of assets and retail banking Jonathan Byrne says the new regulatory landscape post-MMR and the growing number of people using brokers were the reasons behind its decision to use intermediaries.

He says: “There are two reason why we are making this change. Firstly, post-MMR the regulatory landscape has clearly, in our opinion, very closely defined the role of both the lender and the intermediary and set out the accountability of each party.

“Secondly, and probably more importantly in lots of ways, we are clearly seeing a growing percentage of the mortgage finance market in the UK are sourcing their finance through an intermediary.”

The U-turn is likely to cause anger amongst brokers, some of which have previously called the lender “arrogant” for its insistence on ignoring the broker community. 

But Byrne says he believes brokers will enjoy working with HSBC.

He says: “I am pretty confident that we will demonstrate that we are good people to do business with. We want to get to a point where we can work with each other with mutual success.”

The direct-only lender has refused to work with brokers since its trial with John Charcol came to an end in December 2009. HSBC said the Charcol trial had been popular with customers but the bank never intended it to be an “ongoing arrangement”. Instead it decided it only wanted to distribute through its branches and telephony service.

John Charcol senior technical manager Ray Boulger says: “It is great news when the major direct-only lender recognises the value of dealing with introducers and we look forward to them expanding their distribution rapidly.”

Association of Mortgage Intermediaries chief executive Robert Sinclair says: ”As both parties have said this is an important step forward in the development of the mortgage market post the financial crisis and the deployment of the Mortgage Market Review.  Whist this is a small and tentative step, I am delighted with the commitment from both parties to expand on this.  I have no doubt that as HSBC develops it systems it will look to increase distribution through a wider range of partners.

”I am delighted to see HSBC recognise the real value of the professional intermediary market.”

Last year, HSBC lent £14.5bn, down 11.5 per cent year-on-year, making it the UK’s fifth biggest lender. This saw its share of the market fall from 11.3 per cent in 2012 to 8.2 per cent last year.

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  • Michael.White.BoutiqueCapital - Bridging Loans 6th October 2014 at 1:20 pm

    Significantly, there is an assurance that dual pricing will not be brought into effect.

    Accordingly, I completely agree with Ray Boulger, in that the market is now awaiting the fuller expansion of HSBC’s ‘new’ distribution strategy.

  • Harrison 2nd October 2014 at 3:39 pm

    Personally I think this is a great move and welcome any lender wanting to use the intermediary sector.
    I have no thoughts or comments on HSBC as I’ve never been able to use them before. To comment on their service & reputation is inappropriate unless you’ve worked for them and experienced them 1st hand.

    As a broker that puts my clients interests 1st, to have access to another large lender is great news.

    The only shame is that I’m with PTFS, so the chances of me ever being able to use them is pretty much nil.

  • The Cynical Broker 2nd October 2014 at 3:06 pm

    How ironic that the “worlds slowest mortgage lender” has teamed up with an estate agent ??? Be interesting to see how much grief Countrywide’s negotiators give HSBC for not getting valuautions instructed within 24 hours of the buyers offer being accepted !

  • The Cynical Broker 2nd October 2014 at 1:29 pm

    How ironic that the “worlds slowest mortgage lender” has teamed up with an estate agent ??? Be interesting to see how much grief Countrywide’s negotiators give HSBC for getting valuautions instructed within 24 hours of the buyers offer being accepted !

  • BTL 2nd October 2014 at 1:01 pm

    The question is one of trust.

    Do you trust HSBC with your clients. The bank that says one thing but does another.

    Most brokers would have had clients coming to them after being promised a deal by HSBC which turns out to be something completely different. Much too high a risk to work with this bank,

  • Good Mortgage Man 2nd October 2014 at 12:58 pm

    Hardly a surprise, this has been coming for a long time. I can’t wait to experience their service!? I imagine they will be right up there with The Post Office in terms of time scales…

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