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Can Charcol burn brightly again?

The sale of Charcol has ignited the imagination of many lenders who remember the heyday of the mortgage intermediary firm before it was sold to Bradford & Bingley in 2000.

Two of the three Charcol founders have returned – John Garfield as executive chairman and Charles Wishart as non-executive director.

Lenders are pleased to see Charcol under new management but are anxious over how it will return to a market where competition and performance demands are high under the new regulatory regime.

Since Charcol was bought by B&B for 102.5m, its fortunes have been on a down-turn. B&B said when it sold the firm that Charcol’s net assets stood at around 8m. It also confirmed that Charcol did not make a material contribution to B&B’s profits in the half-year to June. The sale price has been rumoured to have been as low as 5.8m and B&B has made a massive loss.

Some people believe Charcol has got off to an unfortunate start as it is currently trading as an appointed representative of B&B because Castlegate 342, the investment consortium set up to buy Charcol, has yet to receive authorisation from the FSA.

Charcol senior technical manager Ray Boulger says the firm expects to be regulated by the end of the first quarter of 2005 at the latest. Boulger says this makes relatively little difference to the work the sales team is doing but there is no doubt they all want to get the ball rolling.

Marketing director Candice Hodgson is keen for authorisation so she can unveil improvements to the Charcol website. She says: “We are developing a new functionality and new user tools. We hope to be able to launch around the end of March 2005. As B&B is still running the service, we have had to give ourselves this timeframe for these changes.”

In the meantime, Charcol is setting about a recruitment drive. Some branches have closed but the firm is keen to lure back some of its bestperforming consultants who left the company.

Garfield, along with managing director Peter Barrett, admits to opening the door to ex-staff. Product director Walter Avrili says: “Many of our guys left thinking that the grass was greener on the other side but they have found out is it isn’t greener. I believe many will want to come back, and we would welcome them.

“We want a better sense of professionalism at Charcol with a sales team of top-quality brokers who know they have a home here.”

But it will be difficult to get back ex-consultants who have established themselves as advisers in their own right.

Square Mile Wealth managing director Jane Robinson, who worked for Charcol, says: “Charcol will have to offer a substantial package to get people to come back.”

Portman Building Society associate director Paul Howard says Charcol is entering into a market where it will be competing with many former staff who have either moved to or set up successful businesses.

But Charcol seems happy to deal with the competition. Garfield says: “Savills, Thinc, London & Country – they are all very successful and have made good names for themselves but they have a very different strategy to us. We welcome any competition in the market.”

But one source says: “There is more competition out there that has been based on the old Charcol model so how is Charcol going to distinguish itself?”Garfield is very keen to set a high bar for professionalism. He says: “We are getting phone calls from lenders welcoming us back. They say it is a privilege to work with Charcol. This sense waslost to a certain extent with B&B as Charcol was heavily corporatised.”

One lender says part of the problem for Charcol under the B&B umbrella was promoting its individual identity. Charcol, to some extent, had to rein itself in and become more cautious so the speed of reaction slowed down.

Garfield admits that the entrepreneurial vigour for which Charchol was known needs to be enhanced. He says: “The market does not suit long decision-making times. We have to be able to react quickly.”

GMAC-RFC head of marketing services says: “The most important thing is to add value to their customers. This is an increasingly competitive market. Mortgages are more commoditised. They need to differentiate themselves by adding value.”

Another Charcol skill that the lending community expects to see is the management team securing exclusives from lenders.

Scottish Widows Bank senior manager, business development Murdo McHardy says: “What Charcol was really good at was their negotiating power on mortgage exclusives which would increase volumes through the branches. This subsided a little under B&B but I expect to see a lot more of it again.”


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