Specialist lending is an opportunity to add more value, says Pepper Money's Ryan Brailsford
This article was created in partnership with Pepper Money
How important is it today for brokers to understand the diverse needs of customers? More important than it ever has been, said Ryan Brailsford, director of business development at Pepper Money.
“Look at the combination of events we’ve lived through over the last few years,” Brailsford added. “Starting with the pandemic and then straight off the back of that into a huge cost-of-living crisis — customers need advice more than they ever have, and brokers having a deeper understanding of more specialist and complex situations is important.”
Recent study highlights opportunities for brokers
Pepper Money recently released the latest results of its ongoing Specialist Lending Study, which is not only a valuable resource for brokers but also shows customers that they’re not alone in the situations they may have found themselves in.
“It’s a really good piece of work to keep yourself informed with the market and to use with your customers,” Brailsford noted.
A particularly interesting statistic from the study was that two thirds, or 66% of respondents didn’t know the difference between a remortgage and a product transfer. Many lenders have developed a very streamlined direct-to-customer journey for product transfers, so the question is, are customers sleepwalking into a PT without that critical advice from a broker?
“Sometimes it’ll be the right advice, but the ones that worry me are those that don’t have someone taking a holistic view of their finances and ensuring they’re aware of all options that may potentially work better for them,” Brailsford explained. “Sometimes, I think customers think they’re remortgaging when they press the button — they need the kind of support that a good broker provides.”
This issue is even more pressing because UK Finance data reports that in Q2 2023, 88% of mortgage renewals were product transfers, compared to an average of 77% the previous year. Remortgages, traditionally, have been an engine room for broker business, and the rise of product transfers threatens that long-standing pipeline.
Professional advice is critical, and Pepper Money’s study showcases this. Brailsford was encouraged to see that the number of people with adverse credit who would speak to a broker if intending to buy in the next 12 months was at 58%, a big jump in the right direction from 24% last year. He calls it “a very positive message” that underscores how increasingly important the role of brokers is.
Taking a proactive approach
Maintaining a functional CRM system is vital these days, and that means more than just having one in place, Brailsford stressed. Make sure the information is always up to date and keep in touch with customers at least 6-8 months before the expiration of their current deal — or even earlier than that. In an ever-changing market, it’s a smart move to get well ahead of any sort of deadline and make sure customers are getting advice rather than going direct, and Brailsford has spoken to brokers recently who are contacting customers right in the middle of their current deal.
“They know they’re not going to be doing the mortgage at that point, but they’re proactively reaching out to say we know there’s a lot going on in the world, do you want to talk about your overall finances?” he said. “Is there anything we can do around debt consolidation, for example, to help restructure? I think that approach is the winning one in the current environment.”
The study also showed word of mouth is still the most popular way to find a broker, and when you consider that acquiring a new customer can be 5x more expensive than retaining one, “it’s critical to get people talking about you when you’ve helped them,” Brailsford said. If a broker places them with a mainstream lender, the customer won’t necessarily feel motivated to share their experience, he warned, and be more likely to think they can handle it themselves next time.
“I always say, specialist lending is more likely to get you a referral,” he said. “If people feel you’ve helped them with something they weren’t expecting you to be able to help with, they’re more likely to tell friends and family that the broker was incredible and discuss that experience. There’s an argument to be made that embracing specialist can help generate brokers more recommendations, especially by word of mouth.”
Brailsford highlighted that one of the more concerning insights from the study is the misconceptions that respondents have. For example, 25% of respondents believe they have to wait five years after a county court judgement (CCJ) to get a mortgage. At Pepper Money, the timeline is actually six months from registration, and this misconception is a good example of where customers feel that help is unavailable if they don’t speak to a broker. Not only have brokers got the expertise to dispel these misconceptions, but they also have access to a range of lenders that customers wouldn’t if they went direct, such as Pepper Money.
“It’s paramount that brokers are aware of the specialist lending market, that they’re leveraging it when it’s the right option for people, and that their customers are getting that good advice around it,” Brailsford said. “At Pepper Money, we’re proud to provide insights and resources to make sure brokers are kept up to date with the latest products and are able to market themselves effectively in the current climate.”
