"What could have been an absolutely disastrous year in 2020 turned out to be (I suspect) a very strong year for a lot of adviser firms."
FR: You’ve stepped into the new role of CEO of Specialist Mortgage Group since the departure of Matt Cottle last month. How has that been and what have you learnt during these first few weeks?
It’s undoubtedly been a learning experience. Matt was very much ‘front of house’ when it came to the business, and he was (and still is) absolutely brilliant at that. I’m a different kind of character and was quite happy to be more operationally focused because that played to my strengths.
However, it’s been quite clear to me that the CEO role does require more than that, and I have a very clear vision of where I want to take SMG, where we should be concentrating our efforts and what we’ll require in order to do that. I think I’m also acutely aware that no-one can be an expert in all areas – it’s impossible, and if you try to cover off everything, you’ll probably end up doing it all at a lesser level.
Where that’s the case I want SMG to work with experts in their field, who have the experience, know exactly what they’re doing and what’s required, and can offer us far more than we could gain by doing it ourselves.
In a way, it’s obviously about building on what we’ve achieved over the past decade or so, but I think I also recognise that, to a certain extent, I’m going to need to take the business outside my own – and its – comfort zone.
That’s not to suggest we’re going to try and reinvent the wheel but we have a new management structure, and with the opportunities open to us, this does seem like the natural time to grasp the nettle, embrace the market, utilising the technology available to us, and reaffirm where we can offer incredible value and service to advisers and their clients, while also potentially repositioning the business slightly.
FR: SMG have a number of packager businesses and brands. How will these evolve?
Currently we have four separate specialist mortgage packaging businesses with SMG – Y3S Loans, Y3S Bridging & Commercial, Chaseblue Loans and Pink Pig Loans meaning we’re also active in product areas like bridging, equity release and complex first charge mortgages. And while it’s no lie to say that our key sector is the second charge market, we are just as committed in those other markets and will be investing significantly in our specific offering here. And clearly we will continue to develop our second charge proposition given the wealth of experience we have, the relationships we’ve nurtured and developed, and the advice service we’re able to provide our introducing advisers and their clients with.
FR: What can we expect from SMG over the course of 2021?
There will undoubtedly be evolution over the course of the next 12 months particularly, which I think will get us to a much more focused, more efficient place, and it will make the proposition we can offer across all our businesses much clearer to the adviser market. Technology will play a crucial role in this, and we have some incredibly exciting news in this area.
FR: Technology sounds like it is going to play a key part in your proposition and offering going forward?
I think we would say it always has done – we’ve always invested heavily in our tech however as we know technology does not stand still and we have been focusing on adopting technology that further enhances our advice provision, introducer experience and customer outcomes.
That focus is really on our internal systems and we are days aware from making a major announcement which I have no doubt will be an absolute game-changer for the business. We’ve tended to focus on a specific segment of the advice process, but this new relationship and the system we’ll be incorporating, with its ability to bespoke it to our process, will give us so many efficiencies. Development is already underway in a number of other areas off the back of this and we have a number of upgrades for our adviser community and the market which we’ll be announcing over the course of the year.
My view is that our system is our nucleus – it provides consistency, scale, efficiency and intelligence – the better the system, the better the business potential.
FR: Towards the tail-end of last year, the FCA issued a ‘Dear CEO’ letter to mortgage intermediaries highlighting some of the areas which it will be prioritising from a supervision point of view. Second charge mortgages was one of the two areas – what does this mean for the sector and firms like yourself specifically?
I don’t think anyone in the sector will be surprised by the focus on second charges; it’s undoubtedly been a priority for the FCA over a number of years now, and is probably couched against a backdrop where some practitioners were, shall we say, less than compliant in the way they operated, particularly in terms of the fees and charges, which the regulator has specifically said it will be looking at.
We’ve always taken compliance seriously and one of my fundamental roles here has been on quality control, looking at every case, the advice rationale behind it, how the soft facts have been taken into account, making sure all the documentation stacks up, etc. That’s probably even more important when an adviser has introduced the client to us – they want to be sure that every single box has been ticked with regards to the advice and the recommendation, because even though we’re responsible for that, they’ll be the one dealing with client going forward.
The point about fees and charges is particularly pertinent because I have no doubt that some operators in the second charge market are glorified order-takers, and not particularly glorified at that. If you have a client coming to you and telling you they want X lender at X rate and you put that through your books, how does that constitute advice? It simply doesn’t and there’s no way you can justify your fees/charges to clients based on that type of service provision.
Second charge has always been on the radar, this is just the next stage of that and it can only be a good thing if standards and best practice are raised in the sector as a result.
FR: What are the biggest challenges facing advisers right now?
What do you start? Actually I should caveat that because I think the advisory sector is built on particularly strong foundations at the moment. What could have been an absolutely disastrous year in 2020 turned out to be (I suspect) a very strong year for a lot of adviser firms. The big challenge of course is keeping that going although again I think 2020, the changing nature of the mortgage market, the greater complexity in both client’s circumstances and market offerings, etc, plays into advisers’ hands because consumers probably need advice more than ever before.
At the moment, advisers seem to be completing approximately three-quarters of all business and there will undoubtedly be a challenge here to maintain that, but also in how lenders react. Some of the mainstream players will I think continue to attempt to go hard at the direct to consumer market and try to extricate advisers from the process. We’re already seeing that specifically when it comes to product transfers.
I also tend to agree that the future for advisers lies in the specialist space. Mainstream/vanilla mortgages are now much more likely to go through the pipes quickly and via apps and systems. Big lender tech to allow this is improving all the time. But, the good news is that I sense a growing demand in the specialist space and advisers should be taking almost all this business – again I would stress that you’re unlikely to be a master of all these specialist sectors so use the experience of packagers/distributors like ourselves to get the best advice and speediest resolutions for these clients.
FR: If you could see one headline about the mortgage market in 2021, what would it be?
Selfishly it would be along the lines of ‘SMG goes from strength to strength in 2021’ but more widely I think it would be something like ‘Advisers continue to grow market share’ or ‘Second charge market given clean bill of health by FCA’. My view is that you have to be positive and there are a considerable number of opportunities we can all benefit from, if we can get our proposition and messaging right.
