Patrick Bamford entered financial services when mortgages were largely unregulated, specialist lending barely had a name and getting on the housing ladder was simply what young people did. After 44 years spanning lending, second charges, insurance and credit risk, he reflects on the birth of specialist finance, surviving crises and why the industry still has unfinished business.
When Patrick Bamford bought his first home at 24 or 25, he did not regard it as a particularly remarkable achievement.
There was little national obsession with first-time buyer affordability, no anxiety about whether an entire generation might be locked out of homeownership and certainly no expectation that the property he had just bought could be the one he would still be living in 10 years later.
It was simply the first rung of the ladder.
“I use the word ladder because that was an appropriate phrase at the time,” Bamford says, looking back after retiring from a 44-year career in financial services.
“I felt the time was right to move from the family home, as probably did my parents! and one of the reasons why I bought my first house was with the intention of moving two or three years later. It’s not the case now.
“I know some young people who aren’t looking at it as the ladder. They’re looking at somewhere they may stay for 10 or 15 years, which is fine but the challenge is getting on that step in the first place.”
For Bamford, that change in expectation is among the biggest differences between the mortgage market he entered and the one he leaves behind.
The other, inevitably, is regulation.
FROM LIGHT-TOUCH TO STATUTORY REGULATION
Bamford began his career in a financial-services landscape governed by relatively light-touch regulation. Beyond the Consumer Credit Act 1974, firms relied largely on their own internal risk controls.
What followed was a steady accumulation of new requirements, culminating in statutory mortgage regulation in 2004 and further reforms after the global financial crisis.
“I think in many respects one of the most significant pieces of regulation came after the global financial crisis,” he says. “It’s regulation upon regulation, rather than deregulation. Thankfully, thanks to some great lobbying efforts we are now seeing some loosening of that.”
WHEN SPECIALIST LENDING WAS JUST LENDING
To understand Bamford’s career is also to understand something about where today’s specialist mortgage market came from.
He spent 22 years at First National, through its various ownerships, at a time when the finance house was building businesses in markets that would eventually become significant sectors in their own right.
“First National (FNB) was unique because it was independent,” Bamford says. “It was the largest independent finance house in the UK, but it was run by people who were very entrepreneurial. In 1995 Abbey National purchased FNB but largely kept it as a separate entity, retaining and adding to its entrepreneurial spirit.
“You had some incredibly bright people but, equally, they were always seeking new and interesting opportunities for the business, significantly acquiring people who knew about that particular business.”
First National built significant positions in home improvement lending, second mortgages and timeshare finance, while also venturing into commercial lending and leasing.
“They were always looking for something else to do,” he says. “We just continued to recruit, train and coach bright people, and those individuals were hungry to succeed. It was a great place to work.”
That entrepreneurial culture also produced many of the people and practices that would later populate the specialist mortgage market.
Bamford sees a direct lineage from businesses such as First National, iGroup and Future Mortgages to the specialist lenders operating today.
“I think predominantly the specialist lending area came from those companies,” he says.
And this was not a tiny cottage industry. “We wrote a billion pounds of mortgage business in one year,” Bamford recalls.
KNOCKING ON DOORS
Some of Bamford’s most enduring lessons, however, were learned much earlier.
At just 26, he became (at that time) First National’s youngest branch manager when he took charge of its Ealing operation in west London where the average age of the branch team was just 24.
After more than four years there, he was asked to take over the company’s Ilford branch just as Britain headed into the difficult economic conditions and recession of the early 1990s.
Ilford had been run by the same person for around 25 years and was, in Bamford’s polite description, “very set in its ways”. And turning it around required something that would seem extraordinary to a mortgage executive today: for a period of several months Bamford and his staff went out collecting money from customers.
Funding restrictions to secondary lenders meant new lending depended on recovering arrears. “In order to lend to new customers through our products, we had to collect,” Bamford says. “We had to recover money before we could lend it out for new business.”
Collections took place by phone and in person. Representatives pursued payments two nights a week, with Bamford joining each at least once.
“You’d go into some less salubrious areas, but you were generally and perhaps surprisingly invited in,” he says.
When someone promised to pay the next day, the team tested the details: Which bank would they use? Where was the branch? How would they get there?
“You walked them through it and knew whether they were telling the truth.”
Three days later, Bamford called.
“Mr Smith, did you make that payment?”
If not, Bamford offered to send someone back. Often, that worked.
“Not nine times out of 10, or even eight. But six or seven times out of 10, we managed to get those payments or make a suitable arrangement.”
“It was a collective team effort. It was hard, but it was worthwhile and made you think about how you underwrite in the first place.”
THE CRISIS THAT CHANGED EVERYTHING
There would be plenty more difficult markets during Bamford’s career but one stands apart. Not Covid. The global financial crisis.
“The global financial crisis really tested people because you were one minute watching Lehman Brothers just go, and you were thinking: that’s the market gone.”
The industry emerged, but not unchanged.
“People came out of that and worked hard. I think they realised that things did need to change. Chasing volume for volume’s sake was off the table and lenders couldn’t operate in the way that perhaps they did before. There needed to be a few more checks and balances.
“I would argue, however, it went too far, especially with regards to the building society sector and as a result chocked for a long time the first-time buyer market.”
The pandemic presented an entirely different challenge.
Bamford believes the mortgage industry’s response demonstrated just how adaptable it could be when forced to move quickly.
“The industry and the company I worked for were fantastic with its people. It enabled people to carry on working very, very quickly and allowed managers to manage.”
Technology that had been available but adopted slowly suddenly became indispensable. Teams and Zoom calls became routine almost overnight.
“It would have been fascinating if – and I don’t wish this upon anybody – the pandemic had happened in the 1980s. How would we have managed and how would we have operated? I don’t know.”
40,000 POLICIES
By then Bamford’s career had taken him beyond lending and into insurance, giving him a perspective he believes much of the mortgage industry still lacks.
One of his proudest achievements came during the pandemic and involved 40,000 Legal & General mortgage payment protection policyholders. L&G wanted to withdraw from the product and sought another provider willing to take on the book rather than allow policies to disappear as they expired. This was important for L&G.
AmTrust, working with third-party administrator Wessex Group, stepped forward.
The proposition was hardly an obvious money-spinner.
“It was risky because the loss ratios were quite high,” Bamford says. “They were forecast by the risk team to go even higher because of what they and the analytics folks and even some board members thought would happen post-pandemic.”
But crucially Bamford challenged this perception and together with his pricing analyst and support from the then chief executive believed their experience and that of their partners at Wessex meant the risk could be managed.
The transfer took more than a year, involving significant regulatory work, communications with thousands of customers and above all incredible teamwork between L&G, Wessex Group and the mortgage & credit team at AmTrust.
Crucially, the majority of customer premiums were not increased as part of the transfer. And Bamford says around 87% of the policies remained on the book for at least the following 12 months.
“When we took those policies on, we were not making money, and we were forecast not to make any money for over two years.”
Interestingly, a significant portion of those customers are still on the book; it is performing and AmTrust is now one of the leading providers of short-term income protection in the UK.
THE MORTGAGE INDUSTRY’S BLIND SPOT
His years in insurance left Bamford convinced that one part of financial services remains poorly understood by another.
“I would say that the mortgage market doesn’t quite understand the insurance market as well as it should,” he says.
“Whereas the insurance market definitely understands the mortgage market much better.”
He points to insurers that have provided mortgage indemnity insurance on high loan-to-value lending and other credit risk products and questions why insurance expertise is not more routinely included in wider industry and lender discussions.
“When was the last time there was a trade body meeting, either with the government or the regulator, where they included an insurer in those meetings?
“I don’t think there has been – or any we know about.”
His argument is not simply about selling more insurance. It is about considering whether insurers could absorb an element of the risk that otherwise sit with lenders which could then free up those lenders enabling them to consider different types or an increase in mortgage lending, particularly to first time buyers.
“There is much more opportunity in Europe for insurance to be integrated with mortgage companies than there is in the UK. It needs to be looked at as its stifles growth.”
‘IT’S VERY PATHETIC’
That frustration becomes sharper when Bamford talks about protecting borrowers themselves.
Retirement has not dulled his interest in several issues: getting younger people into homeownership, ensuring borrowers can continue making their mortgage payments when life goes wrong and financial education.
On the former, he thinks progress is being made.
“The industry likes to talk. And that’s great. I’m glad it’s in the press, I’m glad it’s on the radio, I’m glad it’s on TV. The Building Societies Association does a great job promoting homeownership and we even have a new government scheme – great, but please don’t put barriers in the way. We need to help the young people wherever they live.
“But we need to have more innovative products. How do we help them get the tools? How do we help them get the right advice? This comes through education and also the quality of advice being provided.
“I think that is improving. I still think we’ve got a long way to go.”
On protection, his assessment is considerably less diplomatic.
“Protection rates across Europe are far higher, with many more people safeguarding their loan or mortgage repayments. By comparison, the level of cover in this country is, frankly, pathetic – the numbers are extremely poor.
“As a result, households can be left financially exposed if they are unable to meet their mortgage repayments.”
Part of the problem, he believes, is the way protection is treated during the mortgage advice process, post the sale and the products being sold.
“The objective is to sell the mortgage. Protection comes as an afterthought at the end, but not maybe at the start of the process. And that’s a culture, a mind culture, which has to change.”
Would he make mortgage payment protection compulsory?
Bamford has never been keen on compulsory products but after four decades in the industry he is prepared to edge surprisingly close.
“I do think that we could be getting quite close to that area where it becomes like a car, or your house where it’s a given that you buy insurance.
“I am not talking about extensive income protection cover. I’m talking about a simple Accident/Sickness and Unemployment (ASU) cover for your mortgage repayment only. Allianz, a global brand has a simple 12-month ASU product and yet around 90% of advisers are not offering this or a competitor product to first-time buyers. Unbelievable.”
PEOPLE, NOT PRODUCTS
For all the products, businesses and crises, Bamford says his career ultimately comes back to people.
Two stand out. The first is Philip George, whom Bamford knew at First National, and who is now a non-executive director at several firms including MSP Capital, Arkle Finance and Equifinance.
“I never actually worked directly for Philip; he was more of a sort of mentor. He’s probably one of the most intelligent people, and he knew how to hit the right buttons and ask the right questions of you.
“Are you looking at things in the right way? The way he talked through situations was brilliant.”
The second is Simon Crone, now group director of underwriting operations at The Fidelis Partnership.
“Very, very intelligent guy. But he would never assume that you knew as much as him. And I think that’s a really good trait.”
Crone would walk colleagues through problems, test whether they had understood and then support them.
“He was great at celebrating your successes, even though he was a huge part in some of those successes. He would take no credit. They were your successes. And I’ll never forget that.”
Of course, there were others, great people from “my first manager Ian to my last Roberta”, though he says “too many companies get confused with leadership and management. Often many talented people don’t succeed in the role they were promoted into simply because the company hasn’t provided the necessary skills, coaching and tools to enable them to take on that role.”
Inevitably, there are a handful of people Bamford would rather not work with again. But even they taught him something.
“You still learn just maybe don’t do things their way.”
STAY CURIOUS
So what does someone who has spent 44 years moving between lenders, brokers, insurance and credit risk tell a person walking into the mortgage or insurance industry for the first time?
“They are both brilliant industries and can provide long and fruitful careers, soak up as much knowledge as you can. Speak to as many people as you possibly can, especially some of the people who’ve been in there for a long time.
“I’m not saying agree with them. Question them. Challenge them.”
Indeed, that very principle came from his father.
“One of the greatest words my father ever gave me was the word ‘curious’. Ask questions. Be curious.”
It is perhaps appropriate advice from someone whose career stretched across an industry that repeatedly reinvented itself.
But before Bamford disappears into retirement, there is one final piece of mortgage industry history to record.
Those ‘legendary’ First National conferences.
One final piece of First National history still makes Bamford laugh.
Each February, staff gathered at a leading hotel to celebrate the previous year’s achievements, with awards presented by celebrity guests including Julian Clary, Rory McGrath, and Chris Barrie, star of Red Dwarf and The Brittas Empire.
McGrath was ‘brilliant, very engaging’, however, Barrie particularly impressed him by doing his homework and immersing himself in the event.
He also stayed the course: long after one awards night had ended, Bamford, in the early hours, looked back into the hotel bar to find only a few people remaining. And there was Barrie still sharing a drink with them.
“One of the best, best nights; you’re walking over people,” he says. “And you’re thinking: I must forget that in the morning. I must forget that. Thankfully there was no social media back in the day,” Bamford recalls still laughing.
44 years later, the industry he leaves is more regulated, more technologically sophisticated and probably more restrained at its conferences.
Yet its need for curiosity, sound judgement and strong relationships remains unchanged.
So is the sun finally setting on this incredible journey? It’s been both a glittering and unexpected career of both door knocking and doors opening.
But surely those doors can’t be closing?
“Retire? Me? Unlikely,” he laughs. “I’m just taking things at a different pace; I don’t have to get a train at 07:10am from Kings Langley. I’ve got a few trips booked, try and improve my golf handicap and of course the garage to clear but after that we’ll just have to wait and see.
“I’m a big fan of Fiona Bruce on BBC’s Question Time but she’d not stand a chance taking on the mortgage and insurance market in a similar situation so maybe I could be a stand in for her when we do The Great Mortgage Debate?
“All joking aside – and I’ve never been known to sit on the fence – but given my experience and background I think I’d do a reasonable a job when it comes to moderating today’s seminars and conferences. Watch this space!”
