At the moment it seems as if everyday the media reveals a new entrant to the non-conforming market. This has done little to ease the sense of competitiveness that has been fuelling the industry of late. In fact, specialist lenders are increasingly being driven to further improve their proposition and offer new and diverse options to brokers.
However, as the majority of non-conforming lenders have little or no face-to-face contact with their end-user consumers, it can be difficult to gauge borrowers’ demands. It is therefore essential to obtain honest intermediary opinion about lender offerings through effective feedback channels. By strengthening and improving the working relations that underlie intermediary facing business, lenders can translate feedback, as a valuable knowledge-based resource, into business capital.
Cultural change
Good communication within an organisation and its partners needs to be embedded within ‘the way things work,’ sometimes requiring behavioural change within business culture and the workings of the sales team. Maintaining an open and honest lender-intermediary relationship within a market environment in a state of continual change and adaptation can be challenging.
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Independently facilitated discussion forums are one of many methods for garnering intermediary feedback. Anonymous questionnaires are also a useful way of monitoring negative perspectives, but communication ‘in-person’ is also important for bolstering both understanding and business levels. Despite a large proportion of daily mortgage business being conducted over the telephone, most lenders also have sales teams in the field. These provide valuable points of contact for brokers and packagers, answering general queries, giving both parties a clearer understanding of how the other operates and taking the lender-intermediary relationship to a higher level.
Providing support
Successful feedback mechanisms are not one-way streams, and strengthening working relationships through such visits ensures a two-fold flow of communication that enables all involved to respond better to business requirements. Partnership lending facilities also offer opportunities for the co-designing of products and a chance to coordinate lender and broker efforts to offer a competitive product that meets market demands.
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It is also essential for lenders to not only get their intermediary proposition right, but to provide support and education on complex issues such as new regulatory legislation and compliance demands. As the ‘Treating Customers Fairly’ (TCF) Lender Forum has noted, the reputation of the lending industry in its entirety may be at risk of misrepresentation – and even be publicly damaged – as a result of poor intermediary compliance with new regulation. In addition, there has also been concern that brokers and packagers, situated at the interface between provider and consumer, may act as compliance buffers, indemnifying lenders against TCF complaints.
Unsurprisingly, one topic that frequently surfaces in independent surveys as a key intermediary issue is education, and support for this, often with regards to new regulation in a ‘principle-driven’ environment. It is crucial, even more so in a contemporary arena as the Financial Services Authority drives forwards another enquiry into the non-conforming sector, that lenders properly address such areas identified as problematic by brokers. Lenders who are successful in the future will be those who assume the responsibility to offer guidance on situations where, for example, TCF principles and lending criteria may appear to conflict, and to offer possible solutions for best practice through workshops, seminars and support websites.
Lenders must listen
Market research at the end of 2006, published by Datamonitor, concluded, ‘lenders must listen to intermediary thought if they wish to capture a greater share of the subprime mortgage market.’ Good communication is obviously crucial, but creating tangible business value from this requires not only the ability to listen effectively, but to reflect, respond and act upon intermediary thought and opinion. This entails much more than an exchange of information and demands that lenders are willing to provide more than lip service to their commitment to intermediaries.
Strong business relationships allow for regular dialogue and response, enabling lenders to work proactively, in tandem with their intermediary partners. In reality, this means having a real desire to engage with key concerns, accept grievances, and address issues concerning regulatory difficulties, lender honesty and service challenges. Successful feedback mechanisms, allowing an honest twofold flow of communication, should form a critical part of lenders’ business strategy.
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