HBOS has sent a clear message to competitors that it has no plans to let its dominant mortgage market share slip.Intermediary distribution and specialist banking managing director Philip Grant revealed last week in a rare interview that an extra £10m will be pumped into HBOS’s intermediary mortgage arm on top of the business-as-usual investment. HBOS has also reinforced its belief in the retention policy it introduced earlier this year and it is also strengthening its general insurance proposition to mortgage brokers. The moves come at a time when some rivals are showing signs that they can close the gap on HBOS’s 21 per cent market share, with Nationwide merging with Portman and Northern Rock being tipped by some as a future challenger on the back of a raft of successful products. Grant says: “This is one of the most fiercely competitive markets and to maintain our position is very tough. This is a technology business and our advantage is held through technology.” It is in technology where brokers are likely to see the bulk of the £10m to be spent, with improved point of sale service and case tracking. Grant says: “We sat down as a board and worked out where we wanted investment and the intermediary mortgage side was where the priority lies. It is all driven by broker feedback and changes will be rolled out over time but generally it is about enhancing point of sale for brokers and case tracking.” New products are also likely to be on the agenda, with HBOS considering launching a similar offering to Northern Rock’s Together package for first-time buyers, but Grant does not give any further details on new launches, other than to say that equity-release is not presently a high priority. Grant, who at 40 joins the band of relatively young senior executives at HBOS, says he regularly gets asked by brokers whether HBOS has any plans to buy an intermediary to ramp up its distribution arm but says there are no such plans. He says: “I want investment to focus on systems, not buying brokers. To buy intermediary distribution, I would spend a long time searching for a successful model but that is not in my plans.” Another question that has popped up during HBOS’s quarterly broker forums with key accounts is whether the lender is likely to drop any of its brands. The Mortgage Business tends to be the target, with some brokers concerned that it lacks focus. But there are no plans to dispose of TMB or merge it with BM Solutions. TMB has tried to make a determined effort to reinforce its commitment to packagers this year through a focused PR campaign and by getting out and talking to brokers, something Grant insists shows that it has the right focus. He says: “There is far more likely to be a sixth brand strategy than a four but we are not searching the dictionary for a sixth brand name, put it that way. You do not turn good brands off. We have been a lot clearer on focus on TMB and are clear around TMB’s position on packagers.” A key strategy of protecting HBOS’s business is the retention schemes launched by Halifax and BM earlier this year, where brokers are paid full proc fees on retained business and the same products are offered to new and existing customers. Bank of Scotland is likely to follow suit next year but there are no plans for Intelligent Finance or TMB to set up such schemes. Halifax has had to dodge a few bullets, with critics saying that paying a full proc fee breaks treating customers fairly principles by encouraging brokers not to shop around but Grant is not worried by the criticism. He says: “All we have done is to create a level playing field at point of sale. There is no longer an incentive to switch or to stay with Halifax or BM. Some of the comments may be because critics do not have access to the systems to help intermediaries be more efficient. We discussed the schemes before they launched with the FSA and there is no TCF concern. The FSA is comfortable with them.” Another key message that Grant is trying to convey to brokers is the importance of general insurance as an add-on to mortgage products. HBOS revealed in July that its intermediary GI team was to join forces with its mortgage intermediary arm and it is following that move with improved technology to aid GI sales. Grant says “GI distribution was confused with HBOS. It was not clear to intermediaries and it was creating a lot of nuisance so we wanted to have direct engagement with intermediaries and get GI and mortgages together. GI needs to be easy and we are bringing applications for GI onto platforms across the five mortgage brands to make it easy to sell GI so we are putting together a single point of entry during the first half of next year. “There is value in selling insurance with mortgages and we are encouraging intermediaries to think about that sales process.” HBOS is also looking for growth in its offset proposition from Intelligent Finance to build on a successful year. Grant even sees offset as replacing the interest-only market in years to come. He says: “People will move away from interest-only bec-ause as some of the current set of borrowers mature, they will be able to use surplus funds and offset against liabilities rather than pay off a lump sum on an interest-only as they will see the benefits. Offset has found its place this year with IF. Every broker I speak to says IF has an outstanding product.” What is clear is that HBOS plans to build on such succ-esses and it has no plans to stand still and relinquish its market dominance.
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