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Woolwich arsenal

Lender profile Woolwich hopes its innovative product suite will give it ammunition to be a top gun in the market. By Guy Anker.

Woolwich is planning more innovation after it saw a 60 per cent rise in gross mortgage lending last year.

Lending rose to £18.4bn from £11.5bn, in a year when it won much praise from the market for its innovative approach with products such as its City mortgage, designed for people expecting big bonuses.

This increase in gross lending dwarfed the market average increase of 20 per cent over the same period.
In fact, 2006 represented a turn-round not only in terms of lending and product launches but also in reputation as the lender had been dogged by tales of poor service over the previous few years.

Woolwich was told by John Varley, chief executive of parent company Barclays, that its 2005 performance was not good enough.

But some commentators have pointed out that the dramatic rise has come from a low base while Woolwich has still not caught up with rivals on technology.

Intermediary business director David Finlay says: “The 60 per cent figure is from a low base but if you look at any mortgage business, only Northern Rock has ever done anything like that. You still had to make those improvements and it proves how well we have done.”

Finlay says this year is going well. “Looking at January and February compared with the same period in 2006, we have doubled business through the intermediary channels in the volume of applications and doubled completions, so it has been a great start.”

Woolwich’s suite of new products has been one of the keys in driving that success. As well as the City bonus range, the firm has also launched a well received lifetime tracker and a track and cap product to protect against rising interest rates.

The latter was labelled as a gimmick by Hamptons Mortgages technical director Jonathan Cornell, as the cap was high, but even he acknowledged that Woolwich had an innovative year.

New ideas have also come in the area of proc fees, with Woolwich last month introducing weekly fees rather than its previous monthly payments. It was one of the first lenders to pay proc fees for retention cases.

Finlay says: “We will look to review the success of the retention strategy. It is interesting that lenders that do not have one are using scaremongering tactics to criticise the practice.”

He points to service as another big factor in Woolwich’s recovery. The company ditched Global Home Loans at the start of last year as the outsourced administrator of its loan servicing and brought those operations in house.

John Charcol senior tech- nical director Ray Boulger believes Woolwich’s service has improved dramatically since that move.
Finlay says: “The key has been servicing. The number of steps in our mortgage processing has gone from 58 to seven. We can give a decision in a day but that was four weeks in the past.

With the full application, we can get the offer in six days. That means increased capacity so we have been able to go into the market with more confidence. Complaints were down by 75 per cent last year.”

He says changes to the way staff work have paid dividends. “We moved from GHL last year and we have comp-letely re-engineered the process and retrained the staff. It was a bold decision to bring it in house and it has proved to be the right decision. Things are coming through quickly and slicker.

“We have changed the reward structure so staff are encouraged to put cases through as quickly as they can. The key has been case management. We would have had a number of people who would track a case but now there is a case manager who owns that case.”

Technology is another key area where the lender hopes to improve its performance, especially because it is still a long way behind some of its competitors as it has yet to develop a fully functional online trading platform, let alone develop instant offers. Both are likely to happen this year.

Finlay says: “We want to show brokers we are serious about business. We use automated valuation models now, which we have been doing on 40 per cent of business.

“The ambition is to improve that. We are looking later on this year to have an online trading proposition and that will be linked to AVMs so brokers will get an offer much quicker.”

Woolwich, which will soon be a mortgage-only brand as all its branches are being rebranded as Barclays, has made it clear that it will not chase volume for the sake of building market share.

Finlay says: “We are getting better at saying no. We are not looking for a short-term fix and whatever we bring to the market has to have sustainability.”

He also reveals that the company will look for niche areas within the prime sector rather than following many of its rivals such as Abbey, Alliance & Leicester and Cheltenham & Gloucester into near-prime business.

“There will be no sub-prime. We believe there are opportunities in the prime residential marketplace. We are not punching our weight in the newbuild market and markets such as first-time buyers will prove to be opportunities in 2007 and 2008,” says Finlay.

On equity release, he says “never say never” but there are no plans at the moment for Woolwich to launch any products in the sector.

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