BestAdvice fires the questions at Chris Waind, Business Development Manager at Central Trust
BestAdvice (BA): You previously worked at a brokerage. What did you learn from your time there?
Chris Waind (CW): First of all, working at a broker is a great starting point for people coming into the industry as it gives you an overall view rather than becoming blinkered and only learning one way to do things.
You get to deal with a whole cross-section of society and the variety of application you receive keeps the work interesting and helps you to develop different styles and ways to relate.
I would recommend a stint at both a lender and broker to give yourself a full view of the market and understand the concerns from both sides of the transaction.
Some of the challenges when working at a brokerage are from customer expectations versus reality: they may not qualify for a headline rate and it is not always down to credit history.
The whole advice piece has moved on somewhat in recent years and advisers’ professional qualifications should give confidence to customers that their broker is recommending the right product.
As a broker we often had to balance the right outcome with business needs such as conversions and timescales, so it could often be a tightrope using lenders where the process may be drawn out but they’re providing the right outcome. Indeed, identifying drop-out points on the customer journey was always a big challenge at the brokerage as we tried to maximise lead conversion.
Making sure the customer goes to the right lender was also key in maintaining good relationships with our lending panel and ensuring that the process was as refined as possible.
BA: How can a lender benefit from one’s experience at a lender, especially with regards to positioning?
CW: As I mentioned above, when working for a lender it is important to understand the concerns of a broker. We may want a perfectly packaged case but need to realise that the broker may be packaging for 10+ lenders and have a full workload. This is not an excuse for sloppy work but it’s about the ability to spot where the broker may need help with understanding a lender’s proposition.
It is eye-opening to work for a lender after being a broker, especially when you begin to understand the regulation and checks and balances that a lender needs to adhere to. The broker is looking to complete the transaction as quickly as possible for the customer but at the end of the day as the lender you need to be sure that the case matches your lending policies, TCF principles and is affordable. Broker transactions are very short whereas the lender will have that customer for a number of years.
Having previously worked for a broker gives you the knowledge that day one for a lender may be weeks down the line for the customer. While there are myriad reasons why an application may take time to reach the lender, the understanding of the customer journey as a whole puts me in a good position to help the broker and understand their concerns.
The fact that I have worked across the market also allows me to support my broker partners with advice and suggestions for cases – rather than being a walking criteria manual I can help package the deal and pick out the key points that may help a referral. I can also advise and explain when it’s not a case for us but can also point the broker in the right direction of someone who can help. We all have our quotas and want to write more business but there is still space in the industry to help each other where we can.
BA: You previously worked at Nemo Personal Finance. Did you find that the product sold itself, and if so, what were the challenges?
CW: My first external BDM role was working for Nemo, which was an established prime lender. The challenge here was to keep the ball rolling and make sure the volume kept coming in. While my phone would be red hot due to the amount of brokers using the product, the calls were always easy to deal with as with this type of lending (with limited risk appetite) the case would either fit or not. If you have the cheapest rate in the market the product does sell itself; I understand there are lots of other things to consider when making a product recommendation to a client but rate will always be key.
The process was slick and the customers were easy to deal with. This was the area of the market that we wanted to attract: customers who would qualify for a remortgage but maybe had high ERCs or only wanted a small loan, for example.
We had no appetite for any adverse or more quirky cases. Lenders like this are needed for the market; the industry has taken a long time to shake off the reputation of being too expensive or the last resort (although this view does still exist with some mortgage brokers.)
As rates dropped to a point where Nemo couldn’t compete, a vanilla product that purely competed on rate became redundant. The choice was to chase the rate or increase the risk appetite; as none of these were options Nemo exited the market.
Writing volume and being busy is always good but when the product is so heavily rate-based you can sometimes feel that you are not making a difference and merely order taking.
BA: Now you’re at Central Trust. What it is like to get up and out for a lender that is so niche?
In my current role at Central Trust I work with a different client demographic to the one that Nemo served. This can bring its own challenges but allows you to get real value from helping brokers place quirky cases.
Often brokers are used to dealing with the easy or more vanilla cases and can struggle when the case is more complex. The broker may not know of a product or have a home for this type of business and we are able to provide new avenues. These solutions can often lead to repeat business for the broker. Of course, the nature of our product is a credit repair and when the borrower is in a better position cheaper options will be available further down the line.
Education is key in the niche lending section and regular communication with brokers is paramount to make sure that opportunities are not being missed.
Due to the nature of the product we will often pick up cases that have been to another lender first: something has cropped up in processing that necessitates a change of lender. This can lead to challenges around timescales for the broker and the customer’s confidence can also be low. This means that we need to have a ‘right first time’ approach to updates. Part of my role is to help manage cases through the pipeline and explain to brokers what we require and why.
I work across both our regulated and unregulated businesses and this brings variety to my role. This is key when speaking to brokers both about cases they see and those they maybe do not place currently. It also gives greater understanding of the market and allows you to take a holistic approach to working with the broker to find the best solution for the client. Having to wear multiple hats at once is a skill all BDMs will recognise!
BA: Post-pandemic, where do you see the market?
CW: I have worked in financial services for over 20 years, experiencing many ups and downs including the credit crunch; however the recent pandemic and the current economic situation is new ground for all of us.
There is a whole subset of customers who have benefitted from historically low lending rates for around a decade and have never experienced base rate rises. Older borrowers will have longer memories and be wary as we see the base rate creep up. In my opinion this will increase to 2.8%-3.0% by around the end of the year as the government tries to control the rising rate of inflation. This coupled with the gas and electricity price increases will start to squeeze family incomes over the next few months.
This will bring opportunities for the second charge lending market. Many customers who are on fixed rates will not want to remortgage but will have the need to consolidate debts to reduce outgoings. We may see a drop in the aspirational borrower as ‘keeping up with the Joneses’ is replaced by more prudent financial management.
As a lender we will work with our brokers to make sure TCF policies are followed and that we are lending to customers who can afford to borrow; we see this as a big opportunity.
I think all brokers will be revisiting their clients and plenty will need help. These customers are often prime, but with the stretch on incomes and the recent Covid issues, many clients’ profiles will have changed and this is where niche lenders like Central Trust will be well placed to support broker partners.
I expect house prices to take a dip in the first quarter of 2023 before stabilising. This will be felt most strongly in the areas that have experienced the greatest rises e.g. London, Edinburgh etc. Places where property prices have not been on boil as much will see minimal changes and should be able to ride out the volatility without too much issue.
I don’t see this as doom and gloom for the specialist market as it will lead to increased opportunity. We are not going to experience the drop in property prices seen in the previous crash but we are going to see high street lenders tighten up on affordability. Specialist lending options are going to be much more important for clients and we will need lenders and brokers to work together on a closer basis.
BA: Any thoughts on what is going to be important within the market in future?
CW: Technology and sourcing systems are key for lenders moving forward – as customers become more and more tech savvy lenders must move with the times.
At Central Trust we have introduced a fully online journey, automated valuations and e-signatures and continue to make investment into our portal. We are providing brokers with clear options and a slick process which helps overall conversions. Lenders who do not adapt and just stick to the paper-based journey will not survive.
Moving forward, closer work between the broker and lender will be key over the next few quarters as customers get to grips with the ‘new normal’ and look to get finances in order. At Central Trust we were able to lend throughout the recession and Covid. This is due to our robust processes and should give brokers confidence that we will continue to lend in these turbulent times. As other lenders restrict criteria you will see us release more improvements to support our brokers even further.
