Round window services in the past five years. Sarah Davidson meets the man in charge
filling the pipeline, in the third quarter applications and completions come a bit more into line and in the fourth quarter you complete everything. If you can show you’re profitable in the first half you will undoubtedly be more profitable in the second half. I think it’s huge to be making any profit at all. In two years that’s a significant change and improvement for both Pink and First Complete.” Much of this improvement has been driven by increasing the amount of protection sold by advisers who had previously focused solely on mortgage income. But the business has also developed a range of referral partners covering commercial insurance, equity release, wills and the like which Round says tentatively can boost income by around 10%.
QUALITY STREET Increasingly lenders are talking about linking proc fees on mortgages to quality. Abbey for Intermediaries announced in June that it would reward “good” quality cases with 39bps proc fees, medium quality with 37bps and “poor” quality cases 35bps. Lloyds Banking Group has also admitted it is considering a similar move. Round is thoughtful about how this will develop and impact on brokers. “We have a regulatory responsibility to help our brokers deliver the best quality they can in the AR business and even where we don’t for our directly authorised brokers we have a range of things we offer support on in terms of education and sharing of experience,” he says diplomatically. But he is increasingly animated when we discuss what this means in practice. “What is quality? That is the real issue. Not every lender agrees or necessarily understands what they want in terms of better quality. There are some things that
www.mortgageintroducer.com
are consistent from conversations I have had with lenders: a lot of that is around packaging quality and correct supporting documentation. That is definitely something we can work with brokers to improve.”
He has a sensible take on the quality debate, which remains vague in many ways. “The best measures of quality are ones that we can influence as brokers. That’s how they can drive a result.” Round lists these deliverable quality measures as an “already inbuilt measure of getting applications to completion”, packaging the original application, ease of obtaining supporting documentation and the honesty of the application in the first instance. This hints towards the elephant in the mortgage market – fraud. “I do think despite huge amounts of work to stamp fraud out it is still an issue. Brokers can be misled by customers in some instances and by introducers
CV Jon Round
Age: 48 Education: Liverpool University, economics and accounting Born: Gloucestershire Lives: Birmingham Football team: West Bromwich
1985: Eaglestar, accountancy trainee 1988: Canadian Imperial Bank of Commerce, residential mortgage manager 1997: Commercial Union, head of mortgage development 2004: LSL Property Services, head of mortgage relationships 2011: LSL Property Services, group financial services director
Favourite thing about today’s market: “You have to be good to succeed”
in others. In terms of improving quality we are making sure that brokers always check the validity of information supplied by introducers. That is something we are able to improve.”
But Round is dubious about quality measures that lie outside the broker’s control to influence. “I think linking proc fees to quality is a reasonable premise; you do have to be a little bit careful how far back you go,” he says. “Affordability, suitability and accuracy of information are one thing but brokers can’t be 100% responsible for what happens to borrowers after completion. There are reasons customers go into arrears that cannot be foreseen. Looking at data won’t always tell the whole story.” Round has a balanced view on how this trend might continue. “I think increasingly lenders will get better data on whether adjusting the proc fee makes any difference to their quality. It really only makes sense to use proc fee as a lever if it can influence the outcome.”
THE FUTURE
The Mortgage Market Review proposes to move to a majority advised market and in all likelihood the banks will have to start offering advice on much of their mortgage business. Round is sanguine and believes brokers will have an upper hand in this new world because they offer clients choice as well as advice. “Choice will be a differentiator but I also think it’s important to see that if I’m an adviser my duty is to you the client. If I’m a bank adviser my duty is still to the bank. They may be offering advice but they’re still employed and paid by the bank.”
It is perhaps a self-evident view, as many of Round’s views have been. But in their simplicity they are insightful. Much like Round himself.
MORTGAGE INTRODUCER OCTOBER 2012 39
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