Bradford & Bingley has taken a step towards its aim of leaving the independent advice sector with last week's sale of investment IFAs Charcol Holden Meehan and Charcol Aitchison & Colegrave.
The departure of high-profile former chief executive Christopher Rodrigues in April led to a strategic review by replacement Steven Crawshaw in May, when he announced he would be disposing of B&B's IFA business, which he described as “non-core assets”, and multi-tying The MarketPlace.
The move has been widely welcomed both by the City and by former critics of B&B.
Hamptons International Mortgages managing director Kevin Duffy says: “I think B&B learnt to its cost that it does not need a whole-ofmarket proposition. The cost involved in running an independent salesforce can be prohibitive.”
He believes that the flaw in B&B's MarketPlace strategy was that it thought the typical consumer would insist on a whole-of-market offering from their adviser whereas he says an average consumer is merely concerned that his needs are satisfied.
Economist John Wrigles-worth says: “Trying to be an IFA under the B&B brand was crazy. Steven is definitely moving in the right direction but is it too little, too late?” But not everyone is convinced that scrapping the IFA brand is the right route.
Liverpool Victoria is just one company that operates as a provider and runs an IFA. Group director – sales Mike Newton says: “Although we have not decided whether to operate a multi-tie yet, I can say that we have no customers screaming out to let them have a limited offering. The industry needs to think about the impact that multi-tying will have on consumers rather than the impact it will have on its balance sheet.”
Wriglesworth believes it is possible to operate an IFA as a provider but stresses the importance of the IFA being a sub-brand.
Last week's announcement that The MarketPlace brand would disappear has led to questions about how customers will know B&B is not only offering its own products.
Mortgage Intelligence managing director Sally Laker says: “The whole point of The MarketPlace was that it was not B&B but rather an IFA which happened to sell B&B products among others. How will this work when the brand goes?” B&B group financial services director Roderic Rennison says: “It will be evident that we still stand for choice, this will not change with the phasing out of the brand.”
Questions have also arisen as to how B&B's sales staff will react to no longer being independent. Newton says: “IFAs as a whole are very professional and I wonder how they will take to working off a limited menu.”
Rennison says: “I do not think this will be a problem in general. There may be a few who are concerned that they are no longer IFAs but, with our proposition, they will still be able to offer choice and I am confident that we will cover the full market spectrum.”
B&B is tight-lipped about its multi-tie proposition but is understood to be taking a product-based approach to its multi-tie proposition, constructing different panels for each product line rather than having a core group of providers in place for all products.
B&B is working on its protection panel first after asking providers to tender to be on its panel in March. It is believed to have received tenders from all the big protection players – Standard Life, Legal & General, Norwich Union, Scottish Widows – as well as smaller players Liverpool Victoria and Bright Grey.
B&B is understood to have shortlisted those providers it is keen to have on its panel and has ruled out Scottish Widows, among others.
Speculation points to a protection panel with four to five providers, which would be following in the footsteps of distributors which have already declared their plan for multi-ties. Bankhall revealed two weeks ago that its multi-tie proposition is almost finalised and will consist of five players while Millfield has a way to go but says five is the optimum number of providers for a panel.
Rennison says: “We are sorting out our protection panel first. The number of providers is not yet finalised but it is unlikely to be less than three or more than six.”
Money Marketing understands that once B&B has its protection panel in place, it will start working through product lines, having not yet approached providers about investments or pensions.
Rennison points out on the investment side that B&B already has a multi-manager investment proposition, which will continue while B&B will also operate a multi-tied investment proposition offering consumers a choice of providers which also have links to external fund managers.
He says: “Our range will probably not be significantly reduced for investments where our current plan is to have the multi-manager as core with funds around it. We will be dealing with fewer providers for protection but terms will improve.”
B&B is unlikely to take the best in breed route for investments and is planning to have a range of possibilities in place so contracts can be selected according to needs.
Rennison predicts that B&B will have one multi-tie for protection and one for the remaining segments of the market encompassing everything from with-profits bonds, Oeics, unit trusts, structured products, individual pensions and stakeholder products. B&B will also be offering mortgages from a far wider panel.
Rennison concludes: “What we are looking for is a way to get business on our books and maintain it with fewer systems and procedures. The more that we can standardise procedure the more advantageous it becomes. I think these discussions will continue even once agreements are in place.”