It is difficult, but I shall leave out the obvious gags such as ‘size really isn’t important’ or ‘it’s not the size, it’s how you use it’. Ah, I am so proud of myself for refraining from such childish banter.
So to matters in hand – enough now – I’m talking about the size and importance of choice concerning lending panels within the mortgage industry.
A lender on any panel should cater for the requirements of a particular niche in the marketplace and for a master broker or packager it is important to take the time to identify the niches within that sector and the service they offer, then work them to their advantage.
The unique selling points of a particular lender aren’t always obvious but a knowledgeable business development manager from a lender should be able to give chapter and verse on exactly how the lender can add value to your proposition.
The broker should always identify where this fits in with their business and use that lender appropriately. The wider choice offered by a larger lending panel could be seen as reflecting the strides being made by the Financial Services Authority’s (FSA) ‘Treating Customers Fairly’ (TCF) initiative. The FSA’s commitment to TCF has continued to gather momentum and it has left the industry in no doubt that it expects the market to be fully up to speed with this initiative within the next 18 months.
So, surely epitomising TCF is being in a position to offer a greater choice of products, from a wider variety of lenders, while providing the ability to tailor a quote for individual customers, therefore resulting in a better all-round service?
Pros and cons
I believe that size really is important in this area. This is not to directly criticise those with smaller lending panels. Companies have differing methods and business models but I believe the benefits of a larger panel greatly outweigh any negatives and for intermediaries looking to create a relationship with any master broker in the secured sector, choice, transparency and flexibility should all be at the top of their list.
Another benefit of a larger panel is higher conversion rates due to increased product choice. The broker can maintain competitiveness in the marketplace and reduce the odds of being beaten on rate by a product outside the panel.
Of course, where there are pros, there are cons. Having a larger panel means that employees must be knowledgeable and of the highest calibre to service the variety of products and offerings, otherwise service could be affected. There are also obvious advantages in dealing with just one lender for all your secured loan needs such as enhanced commissions, product familiarity, uniformity of systems for the products, the list goes on.
However brokers must be careful to avoid putting all their eggs in one basket in an effort to try to make more commission. The broker who chooses their lender in order to offer the most appropriate solution for their customer, ahead of specific lender loyalties, will, without doubt, maintain the longevity of the client relationship and prosper. Remember in this ever-changing market, don’t be caught out by one of your lenders exiting the sector – the effects on a small lending panel could be dramatic.
Whatever the size of the panel, maintaining a close contact with lenders is paramount. I believe a strong relationship with a lender is one of the biggest assets you can have as a master broker and it is important that both parties work hard at building and maintaining such a relationship.
‘All market’ approach
So while biggest isn’t always necessarily the best, a prospective broker looking for a master broker or packager should consider whether it has embraced an ‘all market’ approach.
They should consider whether the needs of their customers can be adequately catered for with the panel of lenders on offer and also whether the master broker can identify the key demands and needs of the customer and find an appropriate product.
Master brokers and packagers must use all their skills, experience, market position, lender influence, and pure choice of product to make the process as simple as possible. Maybe size is important after all.
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