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B&B throws its hat back into the ring

Bradford & Bingley’s new mortgage proposition finally cements plans to rid it of its subsidiary arms and create a high-street multi-tie.

The sale of Charcol in December was the last step that B&B needed to take before it could announce its mortgage broking service.

The panel of 25 lenders that the firm has selected is supposed to be representative of the market as a whole, serving the needs of customers from the high street. B&B currently has 200 advisers but wants to expand to 250 by the end of the year.

Head of mortgages David Bitner says the group is aiming for 5 per cent of the market within three years. He says: “I know some may say our share would have dropped after the sale of Charcol but we will be very aggressive.”

Some may argue that the reduction in the panel from 50 to 25 could dent B&B’s comeback. But B&B says it came up with the new list after interviews with consumers and research among IFAs. It says that most of those interviewed said a lender panel of between 15 and 20 would be sufficient. The panel will be reviewed every six months.

Hill Martin mortgage executive Steve Smith says: “The reduction in their panel seems to be as per the rest of their business. But is it good for the consumer? Would they class 25 lenders as sufficient? I would say not.”

The research B&B conducted also indicated that 90 per cent of consumers would be happy to pay a flat-rate fee for advice. The proposition now includes a flat-rate client fee of 190 and access to exclusive mortgage deals. There is a booking fee of 49 for all exclusive and shared exclusive products, which is refundable if the application does not proceed.

Smith says: “Well, that is fine but people can go to most mortgage brokers for free and get advice on the whole of the market, not just one-sixth of the market.”

Purely Mortgages chief executive Mark Chilton says: “It is beyond me why any borrower would agree to pay a flat fee to a broker who does not offer whole of market. Limited panels may work in the investment and protection arenas but they are massively inappropriate in mortgages where price is a major component of what borrowers look for.”

Chilton says if a customer requires a full placement broking service for which a fee is justified, then a client should go to a broker who will offer advice on the whole of the market, such as Charcol, Chase de Vere or Savills. Chilton says: “B&B’s position is something that borrowers should avoid.”

B&B head of mortgages David Bitner says: “Our proposition is totally different to Purely Mortgages. Purely and London & Country do not offer face-to-face advice in 208 different locations up and down the UK, do they? As far as I know, Purely is a telephone based operation.”

The announcement of the 25-lender panel coincides with B&B confirming that advisers and customers will have access to exclusive mortgage deals. These include two buy-to-let deals as well as a two-year fixed rate at 4.8 per cent with the ability to overcharge by 10 per cent a year. It is also offering a tracker base mortgage at 5.15 per cent for three years and a tracker base at 4.64 per cent for two years. The three-year tracker offers 1,000 cashback and free legals with no fee. The two-year tracker offers a refund of valuation fee and 250 cashback, also with no fee.

IFA Mark Crawford says: “These are features that may seem enticing to the uneducated. I guess it can be argued that this is a way of bringing financial advice to the high street, which can’t be a bad thing but a whole-of-market mortgage broker will have access to so much more.”

B&B is also running an advertising campaign and recruitment drive. Will intermediaries and consumers remember the B&B brand – those rows of little bowler hats?Cartel managing director Carl Wright thinks that brand has little to do with the popularity of any lender any more. Wright says: “The customer wants the cheapest deal available. Brand is irrelevant these days.”

The Mortgage Place consultant Phil Brown says: “B&B has not done itself any favours lately. Their panel sounds very inclusive and there is a large team of advisers along with that but B&B has been in the news for the wrong reasons. It may take customers longer than B&B would hope to get them back through the doors.”

B&B certainly has been getting a fair amount of coverage in the media recently. It had to pay a 650,000 fine and compensation to 6,800 customers for bond misselling between January 2001 and December 2002. The sale of Charcol also brought a lot of attention as B&B recouped nowhere near the 102.5m it paid for it – industry figures believe it was somewhere between 5m and 6m.

The Mortgage Express Max 130 product has also raised eyebrows. Mortgage Express, a subsidiary of B&B, launched the product enabling homebuyers to borrow up to 130 per cent of a property value with no higher lending charges.

Marketed as a “niche product”, there have been some reservations, with Deutsche Bank chief UK economist Ciaran Barr saying the risk to customers posed by such a product is substantial.

Wright says: “This seems like a kneejerk reaction into lending. There has been a real buzz about B&B but I think it has miscalculated its entry back into the marketplace.”

Bitner says: “B&B has very deep pockets. We are not a small broker relying on five deals per week and we can see through any downturn in the market. Our drive for market share is very aggressive. We have a strong high-street presence and we will ensure that our panel is providing the most competitive and varied products on the market.”

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