In the run-up to M-Day, mortgage industry commentators were predicting that the distribution landscape would see market consolidation, mergers and acquisitions with a range of new business models and alliances.The latest development is understood to come from estate agency Knight Frank which is strongly rumoured to be setting up its own in-house broker arm. In an obvious attempt to emulate Hamptons International and Savills Private Finance, Knight Frank is no doubt aware of the leverage that its existing presence could bring in financial services. With 200 offices around the world and over 10,000 estate agents within its agency network, Knight Frank is a recognisable brand across many countries. At present, it refers mortgage business to John Charcol. Knight Frank caters for high-net worth residential customers as well as dealing with commercial properties. Savills director Simon Jones says: “The advantage for us is that we are eight years old. We went into advice at the right time. To do this now is quite a bold move. Knight Frank has to make sure it has the right type of backing as well as the right people.” It is understood that Knight Frank is making moves to find a head of mortgages. Although no names have been mentioned, an obvious candidate would be a Charcol broker who has been dealing with the agency. Knight Frank is described as “a valued introducer” by Charcol’s senior technical manager Ray Boulger. Jones says: “I would suspect that Knight Frank is a significant account for Charcol but it seems like a logical step for them to bring it in-house. The question is why didn’t they do it 10 years ago?” Hamptons International Mortgages managing director Kevin Duffy says: “It will be interesting to see what scale Knight Frank may look to establish any formative business on. Servicing the needs of its prestigious clientele would doubtless produce some gargantuan value work but unless it broadens its trading beyond its own footprint, it may find that in this market, loan volumes may amount to less than 200m a year.” Bradford & Bingley head of strategy & planning Peter Charles thinks that estate agencies which have been hit as the market has flattened are keen to increase revenue. He says: “I suspect that the estate agencies have been doing worse than the housebuilders.” Boulger says: “I think that only about 20 per cent of Savills’ business comes from the estate agency. If Knight Frank does decide to go into setting up a financial services arm, it may get less business from the estate agency side than it would hope for. The market is relatively slow and there are a range of challenges that it would have to take on.” Charcol broke free from Bradford & Bingley on December 1, 2004, rebranding itself back to John Charcol and enhancing its proposition with an improved online service and tied phone service. Most recently, it has linked up with IFA firm Hargreaves Lansdown. Another significant development in the mortgage distribution scene is the merger of Chelsea Mortgage Management and Cobalt Capital. Of the four partners in the new company – Julian Ingall, Richard Taylor, Chris Banks and Andrew Drummond – three were at John Charcol. Taylor ran the corporate and executive arm for 11 years before setting up his own business. Further movement in the market, nine months since M-Day has seen Millfield, Friends Provident, Positive Solutions all creating mortgage clubs servicing tied distribution as well as providing support to members. Mortgage Force has been sold to West Bromwich Building Society. Purely Mortgages chief executive Mark Chilton says the firm is changing stance from no fees to low fees to make up for lenders’ technology systems. Packagers have come and gone, with Mortgages plc heralding the new breed of super-packagers and some looking at an opportunity to become lenders. The distribution landscape has become a lot more complicated. Charles says: “It really is not that simple and we are still waiting for the distribution landscape to become clear. Clearly, there will be winners and losers.” Duffy predicts more alliances. “Mortgage regulation has dramatically increased deal execution processes,” he says.