The Interview
Barclays on the conveyancing and surveying sides as well.
“Look at the whole of the financial services and the mortgage business industry and you can still see gaps where we can plug in extra value,” he says. “That’s what we plan to do.” They’ve some way to go until market domination though. Post acquisition the combined adviser businesses give Countrywide approximately 6% of total mortgage market share and between 14% and 15% of the intermediary mortgage market, which Stockton claims puts them third behind Sesame Bankhall and Legal & General.
Size was an important attraction for Laker too when considering whether to sign up to the Countrywide deal. “Even with the businesses running separately there are areas where we can combine together to the benefit of Mortgage Intelligence,” she says. “For an AR looking at networks it’s attractive to have good exclusives and it’s attractive to be in a network where you are at the top table with lenders because that’s key for getting access to any kind of funding.” Stockton clarifies how the two businesses will run. “Countrywide does the best part of £4bn of controlled distribution with a very short list of panel members.
“MI on the other hand has ARs and the Next Intelligence DA club which has a whole of market proposition giving us access to lenders we hadn’t had before because we run a very controlled distribution panel.
“As the largest single broker in the UK, Countrywide is tied with the estate agents’ in-house sales so it’s useful to have a business that balances this. Mortgage Intelligence is strong in buy-to- let and remortgaging so that gives us a buffer against low house sales. “The model was also a good fit for our existing businesses Hurst Independent and Slater Hogg Mortgages, allowing us to bring both of these into the Countrywide family where before they’d been with Sesame PMS.”
This balancing is key to the success of Countrywide’s financial services business. It also gives both sides benefits.
46 mortgage introducer JUNE 2011
“Countrywide is strong on getting exclusives from lenders and it will be easy for us to negotiate to take basic exclusives out to the appointed representative network. That brings in more business and also makes MI more attractive to other ARs which will help us to grow across the board”
“Countrywide is strong on getting exclusives from lenders and it will be easy for us to negotiate to take basic exclusives out to the appointed representative network,” says Stockton. “That brings in more business and also makes MI more attractive to other ARs which will help us to grow across the board.”
Laker is keen to grow the business and says that has always been the goal. Getting access to deals is one thing but after various well-known network brands going down the tubes over the past three years, brokers are increasingly concerned they are part of a stable network. Mortgage Intelligence posted losses of £388,592 and £695,917 in 2009 and 2010 respectively but Stockton is positive he will announce the business is back in the black after the first quarter of 2011. “Mortgage Intelligence gave us something we could grow and make good profit from,” says Stockton. “We will make a profit in the first quarter.”
Laker explains the losses of the past two years haven’t been down to bad business performance, rather that MI has been committed to building a sustainable and stronger business for its members. Exceptional costs associated with the purchase of Mortgage Next, the DA proposition now relaunched as Next Intelligence, and investment in new IT platforms have now been paid off.
“When you merge with another business, as MI did with Mortgage Next, you’re putting two businesses together and then lifting out the costs,” she explains. “There is a cost to doing that: you have two centres, two lots of people. “Putting the two businesses together was the best thing we could have done because there were amazing synergies between them. But one office was in Caterham one in Bournemouth and there were redundancies. Some of those costs were in the 2009 year end. The transaction and the year end were close together so some costs were in 2010.” Stockton’s thinking is that Countrywide
provides the capital and scale to help Mortgage Intelligence stay on that path to growth through investment. “I think MI will make a profit in the first
quarter,” says Stockton. “That goes back to scale, scope and how we can bring some pieces to play in MI that they didn’t have access to before. We’re doing more business and those exceptional costs have gone.
“Sally can be more aggressive and perhaps grow quicker than she was anticipating because we’ve got the scale, the capital and the wherewithal to put behind her.”
Laker nods in agreement. “We’re always looking at recruitment,” she says. “I think every AR network does because that’s the nature of the business. There has been quite a lot of consolidation in the industry and ARs thinking about moving want to know it’s a good business partnership they’re entering into.”
Stockton confirms this intention. “We
remain acquisitive,” he says. “Until we had a network we had nowhere to put AR firms we might have been interested in investing in. We moved Hurst and
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