Sometimes journalists walk out of profile interviews with a deflated feeling, wondering how on earth they can transform the previous hour of scripted management jargon into an article people will actually want to read.
Not so when leaving an interview with John Charcol chief executive Mark Fleet. In his first interview in the role, six months on from joining, Fleet not only talks candidly about plans to “make Charcol great again” but also sets the firm’s critics straight and discusses its future post private equity.
The journalistic cherry on top is that he was once a professional footballer so, if Mortgage Strategy readers still don’t like this article, perhaps I should give up the day job.
Fleet first got into mortgages in 1989, after a five-year stint with Brighton & Hove Albion. But his football career was cut short, as many are, by knee problems. Fleet says a snapped cruciate ligament at the age of 21 meant he “had to find a proper job”.
Unsurprisingly, football proved to be a good springboard into the mortgage market. Fleet’s first mortgage interview, at Chartered Trust, partly came about because the interviewer was a Seagulls supporter.
But if football helped get him in, ambition and hard work kept him there. After 12 years at Chartered Trust, Fleet moved on to Chase de Vere, Moneyextra, Skipton Building Society and James Hay Partnership, before setting his sights on the top job at John Charcol.
Fleet is clear about what attracted him to his current role. He says he got to know the business while working at Skipton, and a meeting with John Charcol executive chairman Ian Darby sealed the deal.
He says: “I came up here, met him and liked what he was doing with the business. It is a superb brand with superb business. While they are backed by a PE house, when I went in and met them they talked about people – a lot. And that culmination of liking the shareholders, the business and the people I had met gave me a compelling reason to come and join.”
He says his first impressions on his first day on the job were positive. “I met some people that were passionate about looking after customers, had real loyalty to the business and had been here a long time.”
But he quickly realised that his corner office, a common privilege of rank for chief executives, was cutting him off from the beating heart of John Charcol – the sales floor, where he now prefers to sit.
He says: “Being on the sales floor you hear what’s going on, you can interact more readily with people. By my nature if I go into an office I will stay in an office, so I had to physically make sure I didn’t do that. And it is more fun. I spend more time at work than I do with my family, so I want to enjoy being here and interacting with the people we’re working with to sort the business out.
“They have been through a lot of change. So there were and are some challenges for the business, to get it back where it should be. But also a real, deep-rooted desire to make Charcol great again.”
CV – Mark Fleet
2017–present: Chief executive, John Charcol
2015–17: Chief commercial officer, James Hay Partnership
2008–14: Distribution director, Skipton Building Society
2005–08: Managing director, Moneyextra
2001–05: Chief operating officer, Chase de Vere
1989 – 2001: Head of customer management & collections, Chartered Trust
Place of birth: Manchester
Hobbies: I play golf as my main hobby. I have a 10-year-old son, who needs a taxi, and my wife has horses that we look after.
Favourite band: Being a Manc, Oasis and that generation of music is what I was into growing up.
Mortgage: Five-year fixed rate.
Making Charcol great again is a major part of Fleet’s to-do list now he has the top job.
The broker is a much-loved brand in the market. ‘Charcols’, as it is informally dubbed, has employed many of the sector’s current top brass and has a brand and customer loyalty that are the envy of many.
But the firm has also developed some issues. Staff retention, productivity and the visibility of the business have all taken a knock in recent years, not helped by a string of management and ownership changes that have affected the firm since 2010.
To recap, in February 2000 Bradford & Bingley bought the firm. Then in 2004 it underwent a management buyout with one of the original founders, John Garfield. In 2010 the firm went into administration, was bought by Towergate Financial, then was bought again by Palatine Private Equity in March 2015.
Getting over the wobbles
Profitability has also become a problem. In 2015 the firm made losses of £36,000, rising to £970,000 in 2016 and £1.4m in 2017. Much of the 2016/17 losses are due to integration costs for Charcol’s Simply Finance acquisition – more on this later – and necessary reinvestment in the firm.
Investment was lacking when Charcol was owned by Towergate, as the mortgage broker was just one part of an insurance colossus and was judged to be non-core.
But Fleet is clear that Charcol has strong foundations and can get over the few wobbles it has experienced. One of the ways he plans to do this is to start with overhauling staff training.
He says: “Charcol has set the benchmark for nurturing talent over the years, to the benefit of a lot of our competitors. My role now is to get that passion back into recruiting, training, developing Charcol people for the future of Charcol, rather than the future of the industry.”
To help, the firm has expanded its graduate training scheme and set up a training academy in Southampton.
On the retention side, Fleet says there is always a chance that rival firms can swoop in and poach trainees.
“That is always a risk,” he says. “But first and foremost we are a people business. If you get the people side right that reflects in the customer service you get.
“Our job is to get the best people, train them properly and then engage them to want to stay at Charcol rather than go elsewhere. If we get our values and behaviours right, and the way we look after our people, then they’ll stay. Part of the reason why, over the years, people have drifted away is they haven’t been happy working for Charcol. We’ve got to change that.”
To improve productivity and profitability, Fleet says the firm will revisit what it does best and do it better.
“The key to turning the business around is getting good advisers on the phone or in front of clients, and selling mortgages. That model hasn’t changed. We are now recruiting the right advisers, we have opportunities and leads through marketing to keep them busy, and we have processes in place to make sure they are productive. Over a period of time, because of distractions and whatever else, that wasn’t happening on the level it needed to be.”
Also on the profitability side, John Charcol has historically relied strongly on the London market and buy-to-let. With the fortunes of both not being quite as rosy as they once were, this has had an understandable effect on the mortgage broker, and was singled out in its latest full-year accounts.
Knowing your customers
But Fleet is upbeat about the future for both. “The London market is still strong. The advantage of Charcol and its heritage is we have an extremely strong existing customer base that come back to us and refer customers to us. People still need to remortgage, to look at current deals and see what’s coming up.
“On the buy-to-let market, the same. Again, they are coming back year in, year out. So it can always be stronger, but when you’ve got a very strong customer base, and the longevity of the London-based advisers is 10 to 15 years with Charcol, they’ve known customers for a long time.”
The Charcol name also helps win business, Fleet says: “We do have a brand advantage. People do think about Charcol.”
So what will the future hold for John Charcol? While London and buy-to-let may remain strong, Fleet says diversification in search of new sources of income is not out of the question. The chief executive says part of the firm’s acquisition of Simply Finance and Simply Loans in January 2016 was to diversify geographically.
He says: “We have expanded in Southampton, and part of that is to diversify. That is all telephone-based, and covers the UK market as well. While it is primarily South and South-east as our core markets, we have a bit more diversity with the Southampton operation. Plus some of the brokers in London do telephone-based advice and can cover the UK.”
The Simply Finance deal also moved John Charcol into the second charge market.
The firm could also look to diversify into other business areas, but will mainly focus on its current ones, Fleet says.
“We will look at other areas. The obvious areas that mortgage brokers need to look at, we will look at. But the key to this business is to be successful in what it currently does.”
Fleet will also be ensuring the firm has a higher profile. Other brokers say John Charcol has been more of an enigma recently than it once was; quieter and less visible. What would Fleet say to people who say that?
“I think they are probably right,” he says. “But if you look back, the business was extracting itself from Towergate, buying Simply Finance, there was a lot going on internally. So getting your internal communications right before you go external is important if you are building any brand. I have done the same thing.”
Another rumour around John Charcol recently was that it was up for sale. Fleet says at this point there is no truth in that. “Because it has been sold a few times, there is speculation about it. Because it is owned by private equity, there is speculation about it, and also because it is Charcol. It is a big brand. There is a sense of people still being very interested in this business. Plus, everyone likes a rumour.”
And he has a clear message for those whose talk about Charcol strays beyond honest interest and into more sneaky territory. “If people gossip about Charcol that is their issue, not my issue. My issue is: I want the 200 people who work for me to be doing the things we agreed to do and looking after our customers.”
Well, that’s cleared that up, then. So what else can we expect from John Charcol in the future?
First, Fleet says the firm will continue with its current plan for this year, namely “to make sure the business is efficient, performing well and we are providing the right level of service, so as to hit the plan I have agreed with shareholders.”
Once the firm has improved productivity and shown it can retain service levels, it will focus on growing the top line and profitability.
Fleet says the rest of this year will also see the firm wrap up its integration with Simply Loans and expand the Southampton operation. The firm’s lease is also up on its London offices in September, so the company will be hunting for new headquarters in the capital.
To list or not to list
What about the future beyond the current private equity ownership? Could the firm look to list – an avenue already taken by London & Country and Mortgage Advice Bureau, and one beloved by private equity? Fleet says going public or selling is an option – but not an imminent one.
“Am I sitting here thinking about it now? No, because I have a very clear plan for the next year, or 18 months. However, we are owned by private equity, so the next two to three years we will need to work out what happens post PE.
“You have to have a robust, scalable business if you want to IPO, and that’s what we are building, so it gives us an option. But it also gives an option to sell to trade or go back to private equity. I think if you create a good business it creates more options for the shareholder.”
Fleet may have been leading John Charcol for only half a year but it is clear he has a solid grip on the business and bold plans for its future – making Charcol great again.