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Branch lines

Outgoing Lloyds Banking Group sales director of mortgages Nigel Stockton told Money Marketing earlier this month that the bank’s share of intermediary lending or a percentage of its overall lending could fall by a third over the next few years.

The bank, which is the biggest player in the intermediary market, currently puts around 70 per cent of its overall lending through brokers.

However, Stockton, who moves to Countrywide on October 1, says Lloyds is likely to concentrate on pushing business through its branch network over the next few years. But he stressed that intermediaries remain important to its strategy.

Stockton said: “Lloyds will probably concentrate on the branch network but equally it will retain a focus on being the biggest and best mortgage intermediary lender.

“The fact of the matter is the majority of Lloyds’ lending this year will be from intermediaries and it is not moving away from brokers entirely but the ratio will get closer to 50 per cent of all mortgage business.”

If the bank does decide to pursue this strategy, the effect on intermediaries could be dramatic. However, some of the biggest high-street lenders have assured Money Marketing they are unlikely to follow suit.

Santander says it will place a strong focus on the intermediary market in the short to medium term. A spokeswoman says: “The intermediary market is of great strategic importance to us and we want to be not only the biggest brand supporting intermediaries but also the intermediary lender of choice.”

Co-operative Bank says it aims to increase its presence in the market throughout 2011 and Nationwide stresses it has already invested in technology for its broker proposition, showing its commitment to the sector.

Barclays also says it plans to “maintain the current strong proportion of business that is generated through intermediaries” but NatWest Intermediary Solutions, whose parent organisation is RBS, says while brokers are important to the business it would “need to retain flexibility”.

MoneyQuest managing director Simon Jackson says the prospect of Lloyds favouring a more direct approach to lending will have an impact on intermediaries.

He says: “To an extent, it is concerning because HBOS has been intermediaries’ best friend over the past couple of years. If there is a genuine desire to turn that channel down in favour of direct, it has got to have an impact on the intermediary market generally.”

Association of Mortgage Intermediaries director Robert Sinclair says the prospect of a less intermediary-friendly Lloyds is worrying, but says lenders that have tried to attract more of their business through branches in the past have failed.

He says: “There are big organisations with large branch networks that want to alter their distribution set-up and attract customers through the doors. There is a big question over whether they will manage to achieve that or not.

“Every time they push to get a bigger share of the market through their branch network they struggle to get it. I do not see how anything is going to change because consumers want advice and they want choice.”

First Action Finance head of communications Jonathan Cornell says Lloyds has been pursuing this policy for a few years and it is not as frightening as the prospect of the bank pulling out of the market and becoming a direct-only lender.

He says: “If they were to say they want to stop doing mortgages through intermediaries altogether, then that would be something to be concerned about but I think over the past couple of years Lloyds has instead been pruning its reliance on the broker sector.”

London 7 Country head of communications David Hollingworth says it is encouraging to see other lenders stating their intentions to maintain and grow their presence in the intermediary market.

He says: “I would not be hitting the panic button yet but I do think it is great to get a statement of intent from some of the other lenders. If these kind of names are keen to push in the intermediary market, then that will have the benefit of cultivating a more competitive market.”

Jackson says this is an ideal opportunity for one of the other bigger lenders to move into the space Lloyds will leave if it does try to push more business through its branches.

He says: “I think there is a good opportunity for some of the other lenders but only if they have the resources, which is important because if you wire yourself up to the intermediary channel, you might end up with a flow of business that you may not be able to fund.

“However, I do think there is an opportunity for another lender to take over as the number one on the intermediary side.”


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