Ward says rarely in the past have intermediaries and lenders had a true partnership relationship, and there is potential for that to change.
He said: “At Basinghall, the lender we administer, we chucked out the rule book on the lender broker relationship.
"It’s absolute rubbish when lenders say they have close relationships with seven thousand brokers with a sales staff of a hundred.
“We looked at the brokers we did have personal relationships with and used the 80/20 rule to decide, right, we’ll work with the top fifty intermediaries who give us most business on a consistent basis.”
Ward says lenders could go further, and bring brokers into their business decisions.
He said: “It requires a genuine and reciprocal relationship with a lender’s broker partners, and the desire on the part of the broker to be in business with that lender for the long-term, but it’s possible to bring brokers in on product pricing and profit-sharing. We did it at Basinghall.”
The Basinghall model meant the lender let brokers in on the strategy behind product pricing, something most lenders would never even dream of Ward says.
The idea behind this arrangement was to afford brokers some say in the product shape, but more often, a clearer understanding of risk assessment and the reasoning behind product structures and pricing.
Ward said: “We understood the brokers we were working with – they wanted to create embedded value in their businesses over the long-term, which aligned their interests with our own.
"We entered into a profit-sharing arrangement with them, and trusted brokers to help us achieve our goals because they were benefitting themselves.”
Because the model is unusual, Ward says it’s necessary to work with the FSA to structure it. And he said in the case of Basinghall, the regulator was encouraging and approved of the way it worked.
he added: “It’s time that lenders and intermediaries reassessed their traditional relationships.
"Bringing brokers into the process worked well at Basinghall and I’d definitely do it again in the future.”
Homefunding is currently managing the back book for Basinghall, but Ward says he has plans to return to his roots and try to set up a new lender, something the market is badly in need of.
He said: “It’s certainly something we’d like to do, but the market is undeniably still hard, particularly as there is no established bond market in working order at the moment.”
