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Chancing their arms

Guy Anker on the trend for societies to create separate brands for intermediaries

West Brom for Intermediaries was unveiled this week, continuing the trend for building societies to put daylight between their direct and broker-led propositions.

Many commentators are not surprised about the move, although some have questioned what difference it will make other than to provide a channel in which to securitise and sell off portfolio business.

Coventry Building Society head of sales Colin Franklin says: “I struggle to think why you need a separate subsidiary just to sell intermediary business, because you can do that successfully without a separate brand.

“Our brand is strong enough on its own to sell to intermediaries. If West Brom has gone down that route maybe it is with a view to securitising in the future as that needs to be done via a non-member body.

“I do not understand why lenders set up a brand to sell solely into the intermediary market. We doubled our intermediary business last year with our brand, which we think shows that you don’t need another name.”

Other building societies to have created separate brands for intermediaries include Britannia, with Platform as a separate arm, Yorkshire with Accord, Derbyshire with Salt and Portman with The Mortgage Works.

While Franklin questions the need for such operations, he does not rule out Coventry creating an intermediary arm, although the building society has no firm plans to do so at the moment.

He reveals: “We might still create a separate brand for intermediaries in future but only if we need to securitise and not to just sell to intermediaries.

“All the building societies seem to be doing it at the moment but it is probably not worth while for smaller societies to do so as they won’t go via the intermediary market as much and will not need to securitise.”

The Building Societies Association expects more building societies to create separate arms for different parts of their business.

BSA spokeswoman Rachel Blackmore says: “We may see greater diversification from building societies in how they source business and what business they are doing so it would not surprise me if other societies created separate arms to house their business. There will be a trend of creating differing platforms for different parts of the business.

“More building societies are looking to diversify away from cash and residential mortgages to look at other parts of the mortgage market and other financial products.

“On the mortgage side, any changes may not affect all building societies as not all of them rely on the intermediary channels. I think it will depend on how building societies source their business. Some are sourcing more and more from intermediaries and others are relying on the direct proposition but, when sourcing from intermediaries or other income streams, it makes sense to create a separate profit-and-loss centre.”

How building societies generate business has been a source of contention for some brokers, although many societies seem finally to be focusing on intermediaries. Nationwide recently admitted it needed to improve its offering to intermediaries and many other societies, such as Coventry, have revealed in recent weeks and months that they have seen huge increases in broker-led business, which shows that the broker market is increasingly important.

And any developments to house that business separately are not just about brand. West Brom for Intermediaries will be the home for all the society’s business sourced from brokers, from back office functions through to sales.

West Brom says it needs to draw a line between intermediary and direct sales due to the huge growth in its intermediary business. It will process broker business in Coventry, Nottingham and West Bromwich.

The lender completed 968m of intermediary business last year which represented 75 per cent of all mortgage transactions, but hopes to increase that to 1.5bn a year, with improvements in its direct proposition also planned, which could see 81 per cent of all income coming via brokers. West Brom Mortgage Company, a non-member organisation used for portfolio acquisitions, will be the intermediary lender behind the push.

West Brom assistant general manager for intermediary sales Paul Marland says: “We have seen an increasing reliance on intermediaries on business delivery so we need a dedicated intermediary lending arm which will be backed up by an exclusive intermediary product range and moving the website forward.

“The business has grown beyond just servicing the heartland of the West Midlands, and with growth in the intermediary side we have had to sit down and look at how we move forward.

“Intermediaries will be able to apply online for mainstream and sub-prime and get a decision in principle. They will also be able to do single property buy-to-let from now and eventually multi-property online.”

Mortgage Force managing director Rob Clifford insists the changes will have no effect on his broking operation, which is owned by West Brom. He adds: “Lots of lenders have shaped up their intermediary offering by trading through distinct brands and we welcome it as it helps intermediaries by creating a focus so they know where they are going, and it can only enhance their relationship with lenders because of the dedicated service.”


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