FR: Charter Savings Bank is one of the newest banks in the market – can you talk us through the decision to apply for a banking licence and how this new status will affect the plans for the business going forward?
Applying for the banking license was all about diversification of funding. One of the many things we learned in the downturn was that lenders reliant on one type of funding fared much worse than those lenders with access to multiple funding sources and especially to lenders with access to retail deposits. We want to build a long term sustainable business that our employees, customers and intermediaries can rely upon to be around even if markets get choppy.
FR: Will it change what Precise Mortgages, as a brand, offers?
The bank doesn’t change Precise Mortgages’ offering but with stable funding comes consistency and reliability. Our strategy is to be the number one specialist lender in the market and we continue to launch new products and enter new markets.
FR: Challenger banks are something of a hot topic in the media at the moment, with many of the banks outside the Big Six offering competitive rates. What other benefits do challengers offer to brokers and consumers?
For me the tag Challenger relates to savings not mortgages. We are a specialist lender which provides lending products to customers who are underserved by the big six. We have a long list of new product developments lined up for later in the year and right through 2016.
FR: Do you foresee a negative impact on secured lending volumes as a result of the MCD?
Yes I do. Post MCD lenders will have to focus more on affordability and verification of income, just as they do in first charge lending. We have been applying MCD rules since we launched into the second charge market but when other lenders follow suit I believe we will see the market contract. However, once we see a base rate rise I believe customer demand for remortgage products will increase and many brokers will consider whether a second charge is the most suitable option. The net result is that the second charge market should grow even bigger than it is today.
FR: How do you think brokers can best prepare themselves for the changes to second charge as a result of the MCD?
Firstly, the broker needs to have the correct permissions from the FCA, without them they cannot operate in the second charge market at all. Then decide whether to give advice or refer. Over time I believe many brokers will opt for advising on second charge loans.
FR: If you weren’t working in financial services, what would you be doing?
I don’t know anything else as I joined NatWest Bank immediately after I left sixth form. I cannot picture myself doing anything else.
