Fostering relations

QYou recently restructured to move away from a branch-based intermediary offering to a more centralised function. Following this, I increasingly have to contact senior members of staff at C&G in order to get cases through. Do you accept your restructuring has made it more difficult for intermediaries to use C&G?

We are fully committed to the intermediary market and to demonstrate this, we are restructuring our business to improve the standard of service we offer. We will complete the process towards the end of this year and we absolutely believe that this will make us more intermediary-focused.

We have responded to feedback and our new proposition is structured robustly to offer intermediaries the best of both worlds - personal contact and the speed of technology. Our new structure offers intermediaries a local business development manager (BDM) contact, who can be found easily on our website. We have made the approval of applications far more intermediary focused with Caseflow, our online system, providing a point of sale decision.

More complex cases can be referred to our central team and again your local BDM will offer guidance on that. Our centralised telephony unit will support intermediaries in getting quicker responses to calls and we have developed our corporate account team to work closely with our key distributors.

QYour Fixed Rate Plus function considers offering mortgages to borrowers who do not qualify for your standard fixed rate products, although Fixed Rate Plus products charge a higher interest rate. How does it make sense to offer a higher-cost mortgage to somebody who could not afford the standard option?

We will never lend to someone unless we are satisfied they can repay the loan. However, the possibility of default always exists and we know it increases slightly the more that is borrowed relative to income. It is perfectly reasonable to reflect that increased risk in our pricing and we are not alone in the market with this approach. But the basis principle holds true - if we do not believe the loan is affordable, then we do not lend.

QThe rates on your non-conforming proposition Assist are not very competitive. Are you a balance sheet lender, or do you securitise? Will you still be active in the adverse sector in six months' time?

The Assist product is designed for clients who have had financial or credit problems which have resulted in a CCJ either within the last two years and the amount was between £100 and £2,000 or more than two years ago, up to £5,000.

We are predominantly a prime lender and our Assist pricing reflects our controlled development into a market that we recognise is complex. We are confident, given our business levels to date, that our entry has been at the right place. For our Assist range we are a balance sheet lender.

We continuously monitor the near prime market as well as the wider market to see where opportunities exist. All being equal, we expect to still be active in the near-prime market place in six months' time, but it will remain a small part of our overall business.

QThe Council of Mortgage Lenders' (CML) gross lending figures for 2006 show Lloyds TSB was pushed into fourth place by Northern Rock, with Abbey taking your third place spot in terms of mortgage balances outstanding. Does C&G have ambitions to climb back up the table, and what areas will you focus on to try and achieve this?

We aim to get the right balance between value and volume. Instead of chasing market share we are selective about where and how we compete.

To help us deliver this strategy we are expanding our corporate accounts team to build even stronger relationships with our biggest value accounts. We are comfortable with our approach and if this focus on bigger value accounts and penetrating appropriate sectors of the market moves us up a notch in the CML table, all well and good. But climbing the table is not what our strategy is about.

QI used to use C&G a lot for clients requiring large loans, particularly on applications that required some intelligent underwriting. Recent changes, however, mean that over £1.5m, C&G is no longer very competitive. What were the reasons behind the changes, and have you seen your large loans business suffer as a result?

If we can work in partnership with intermediaries in this market space where clear evidence of profitable large loan business can be demonstrated, then we will participate. We have been successful to date in this market, which is occupied by fewer lenders today. Our large loan business has not suffered as a result of our recent changes as we write good business for both our business and our intermediaries in this area.

 

QEarlier this month you announced plans to reduce your intermediary sales managers and instead put money into developing your intermediary technology. Will having fewer staff to interact with intermediaries not affect the service they receive?

We believe C&G for Intermediaries has developed this year into a key lender which is fully committed to the intermediary market and is responsive to market demands and intermediary feedback.

Intermediaries have asked us to build a more integrated service and support solution, which includes a central telephony unit. This in turn will allow our BDMs to spend more valuable time developing relationships with our intermediaries as they spend less reactive time on the telephone. This is happening now in time for November.

Finally, we recognise the need to work in the new distribution landscape that has evolved since regulation. We will still have one of the larger sales forces in the UK mortgage market and reshaping our team will enable us to increase our focus on delivering to our intermediaries all of the key attributes that they have been demanding from a lender, while ensuring that we deliver successfully on our proposal. n