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.