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Striking Accord

Despite being less than six months old, Yorkshire Building Society&#39s intermediary lending arm Accord has already snapped up 99 per cent of its parent&#39s broker business and is buzzing with new ideas for the broker market.

First up is managing director Linda Will&#39s plan to test self-cert mortgages. She says: “We are in the process of setting up a self-cert experiment with a group of brokers. We are going to clone our existing products as an exclusive for them, adding a self-cert clause. If it goes well, then we will be able to persuade the board that it is not a risky venture and launch self-cert properly.”

Will has so many plans she is keen to put into practice that is hard to keep up. Accord&#39s latest move was the withdrawal of its range of fixed-rate mortgages in August, following a steep climb in money market prices, and launched a range of discount and tracker products in its place. She says: “This move was ahead of the rest of the market and it has had rewards – the new range is doing really well and has also brought Accord a fresh swathe of broker business.”

She is keen to develop niche products for specific brokers. “The idea is to have a staple product range available to everyone, with a big range of exclusives,” she says. At the moment, Accord is looking at developing a product for brokers who deal with professionals such as doctors, solicitors, accountants.

Long-term fixed rate mortgages are another area being considered. Will says: “I can see us developing a long-term fixed-rate product for specific cases. For example, we have been speaking to a broker who is aligned to divorce lawyers. A long-term fixed rate could suit his clients very well, as they are often recently divorced women who need the security of knowing what they are going to pay each month for the foreseeable future.”

But, as yet, Will does not see a long-term fixed-rate product becoming a staple part of Accord&#39s product range. She says: “I do not think the UK market needs long-term fixed rates. At the moment it&#39s just a niche product and will only suit a few people.”

Sub-prime is also on Accord&#39s agenda. Will says: “We always look at the volume of business done in an area, the margins involved, and how difficult it will be to add it to our range. Sub-prime is hopefully going to be part of our plan for the future.”

Equity release is a different story, although Will does say that if Yorkshire decides to step into this market it will be through Accord.

“It would make sense for Accord to pilot an equity-release product. Regulation will be strict for equity release and it would be difficult for YBS to meet compliance requirements when selling through its branches. We would find it easier through our broker network.”

But at present, Accord has other priorities and will not make a move in this direction until the market is regulated.

As an intermediary lender, Accord sets out to be as broker-friendly as possible. It runs a series of focus groups for intermediaries – next year, it is planning on running over 40 – each of which is attended by one of its directors. Will herself aims to attend one every couple of weeks.

“I think it is a big part of my job to be out there speaking to intermediaries – I want to find out what is happening in the intermediary market, what they are looking for, and what they feel Accord can do better,” she says.

The focus groups look at possible new products, service levels, regulation and the marketplace in general. Will says: “We are looking to get an in-depth understanding of what intermediaries see as problem areas. Then we will try to address these areas.”

Regulation is on many intermediaries&#39 minds and, as M-Day approaches, Accord is taking an active part in shaping the landscape. It is a new member of the Association of Mortgage Intermediaries and believes that it is in every lender&#39s interest to keep the intermediary marketplace vibrant and diverse.

Will says if the cost of regulation forces brokers into the big networks, it will be at the expense of competition and innovation. She says: “At the moment, there is so much diversity among mortgage intermediaries. There are IFAs, non-regulated mortgage brokers and appointed representatives. This means that lenders really have to compete for business, which leads to innovative product development.”

But she is concerned that regulatory costs could result in seven or so big networks dominating the intermediary market. She says that these networks would have a great deal of power, as lenders would have to be on their panels to survive.

“The networks could push up procuration fees, and require lenders to contribute to professional indemnity cover in return for a place on a panel. Fortunately, Accord has built up good relationships with lenders and I feel we are well placed to meet regulation head on, but there must be a number of lenders out there feeling less confident,” she says.

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