SD: You’re launching your new mortgage range direct to consumers but might you think about dealing via brokers in the future?
DM: “We’ve no plans to start distributing via brokers at this stage, our focus is purely on launching direct to consumer. We will be internet-only when we launch and that’s because this is how we distribute our other finance products today and we’re doing the same on mortgages.”
SD: Given the onus placed on financial advice in the Mortgage Market Review proposals, what’s your view on the importance of advice?
DM: “In terms of the MMR we’ll obviously be looking at that once it passes the consultation into requirements. Then we’ll look to comply with that and will work within whatever the final rules end up being.”
SD: You don’t have a view on the importance of financial advice?
DM: “On the basis that we’re not providing financial advice we’ll just work within what we’re required to do when it becomes a requirement.”
SD: Your rates aren’t the most competitive on the market – are you testing demand before refreshing them?
DM: “We’re confident on the package of mortgages that we’re offering that we’ll be successful – they’re competitive and we’re offering good customer service and the Club Card will be used as a thank you. We’ve tested our systems thoroughly so we know they work. This is a range of what we believe is competitive products. If you look at the true cost to the customer across rates and fees we feel these are competitive. We’re looking to offer good value to customers short and long term much as we do on our other products in banking.”
SD: What type of borrower do you want to lend to?
DM: “We’ve designed the Tesco mortgage product around what Tesco customers have told us to provide. What came out strongly is that rate and fees would be the key buying decision. We’ve added in some flexible features because that’s something customers said they desired from us. And as a thank you we are issuing extra Club Card points to customers on their monthly repayments and other repayments. It’s designed around Tesco customers and we’re therefore confident that it will do well and be well received.”
SD: Will you be credit scoring borrowers?
DM: “We will be putting all borrowers through a credit assessment and an affordability assessment. Our focus is on Tesco customers who want products that satisfy their needs. We think by going up to 80% loan to value we’ll be able to satisfy most customers’ needs.”
SD: Will you consider customers with any minor adverse in their credit histories?
DM: “We’d just be undertaking, as you’d expect, underwriting based on the fact that we are a responsible lender.”
