The use of data systems to provide market intelligence, such as the Touchstone databases offered by Workload Financial Solutions, will become increasingly important in the mortgage market after M-Day.
Information on what competitors are doing and who is transacting the most business in which areas will be crucial to businesses that want to come out on top once the dust has settled on mortgage regulation.
Workload's Touchstone databases are already widely used across the life and pension sector, with more than 50 companies subscribing. The company is on the verge of launching a proposition for the mortgage market. Money Marketing understands that the new database will enable lenders and brokers to see their own market share and which intermediaries are doing the most business.
A letter seen by Money Marketing sent by Workload to lenders on August 9 says the group has already signed up Halifax, Woolwich, Standard Life and Abbey to the proposition, with letters of accord from Northern Rock, Alliance & Leicester, Nationwide and Royal Bank of Scotland. Around a dozen other firms are listed as parties interested in the proposition.
Portman Building Society associate director of intermediary sales Paul Howard says the success of the new database will be determined largely by the level of participation from lenders but he believes it could have just as significant impact on the mortgage sector as it has had on life and pensions.
Howard says: “I think tools like the Touchstone products will help lenders greatly. It will be an essential provider tool as they will be able to see who is doing what. I suspect you will find the big-volume intermediaries will be swamped with attention once providers see this info, which might mean they get better support and perhaps access to different products. The smaller firms may feel no impact at all.”
But Charcol senior technical adviser Ray Boulger does not believe that many lenders would want that kind of detailed information to be released anywhere, let alone pooled in one resource.
He says: “Every company has management intelligence figures about volumes of business written and fees. I cannot see a company like this being able to make much improvement on what the CML already provides but it may be of use to smaller companies which have fewer resources available to them. But I cannot see it adding to what is already out there.”
The CML already asks lenders to submit figures for its monthly survey of mortgage lenders, which gives a profile of borrowers and indicate how loans are being sourced and the size of the mortgages taken out.
From October 31, the FSA will pool this data with its own, gained from new quarterly reporting requirements which will force lenders to submit uniform detailed information on business volumes and the areas this business is coming from. Some of this will be used for internal supervisory purposes but the rest should be more widely available.
But Howard believes the advantage of extra information for a sales director cannot be underestimated, particularly the ability to see exactly how much business an intermediary is doing and what proportion relates to each provider. He says: “You can never be 100 per cent certain that an intermediary is telling you the truth about how much of your business they are doing.”
He adds that this kind of information will enable better targeting of intermediaries and help sales teams work out market share on a national, regional and even town-to-town basis.
Howard says: “This helps to sharpen up your picture of what will happen across the country in the next few months. The fact is that sales and marketing activities are very expensive and all lenders are feeling the effect of increased competition. Assets like marketing departments will have to work effectively.”
But Premier Mortgages Services head of mortgages John Malone raises one of the criticisms most often levelled at data providers such as Workload – that their information will not be kept sufficiently up to date to be relied on. He says, for his own company's purposes, he would prefer to rely on its own statistics because he feels other companies may not submit the most recent data, particularly for new-business figures.
This is also a concern for Standard Life managing director, sales, Nathan Parnaby. He says the problem with data-gathering services such as Touchstone is the delay that it takes to collate and process the information, which means the figures can give misleading results by the time they are produced.
From the broker perspective, London & Country broker David Hollingworth says he is intrigued by the possibility of a closer analysis of where most business in the mortgage market actually comes from.
He says: “There are different elements to this from the lender/pro-vider perspective and the other side is looking at where the brokers get involved. From the provider side of things, this could be particularly interesting in view of what is happening with Abbey and HBOS.
“Presumably, lenders can see what the individual brokers are doing. It will be interesting to see who exactly signs up. It needs the major players to sign for it to be of any great use. It will be interesting for brokers to see what the competition is up to.”