Bridging & Commercial Magazine — The 2022 Power List Issue

ISSUE 19 JAN/FEB 2022

POWER

2022 LIST This time, it’s all about brokers

+ Head-to-head with the challenger banks p22

Precise.

Contact your specialist finance account manager precisemortgages.co.uk

FOR INTERMEDIARIES ONLY Information correct at time of print (20/01/2022)

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Bridging Finance Specialist funding for refurbishment and property improvement

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NOW

www.utbank.co.uk/find-your-bdm

Purchase | Capital Raise | Conversion & Refurbishment | Developer Exit T: 020 3862 1002 E: bridging@utbank.co.uk

we understand bridging finance

Acknowledgments Editor-in-chief Beth Fisher Creative direction Beth Fisher Caron Schreuder Sub editor Andrea Johnson Senior reporter Andreea Dulgheru Contributor Hannah Godfrey Sales and marketing Beth Fisher beth@medianett.co.uk Special thanks Rob Sinclair, Association of Mortgage Intermediaries Maeve Ward, Mercantile Trust Nimisha Cross, OSB Alexandra Stratton, MS Lending Group Aaron Noone, Master Private Finance Printing The Magazine Printing Company Design and image editing Russ Thirkettle, Carbide Finger Ltd Bridging & Commercial Magazine is published by Medianett Publishing Ltd Managing director Caron Schreuder caron@medianett.co.uk Publishing director Beth Fisher beth@medianett.co.uk 3rd Floor, 71 Gloucester Place London W1U 8JW 0203 818 0160 Follow us: Twitter @BandCNews | Instagram @BridgingCommercialMagazine

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To read about our commitment to the environment and sustainable print publishing, please visit https://bridgingandcommercial.co.uk/page_magazine.

C

hange is upon us. Inflation is at its highest rate in 30 years, with the soaring cost of living—including food, transportation and energy charges, and national insurance increases—set to impact everyone in the UK, with the biggest squeeze facing those on lower incomes. And it is expected to continue to surge upwards in the coming months.

Consequently, the BoE base rate has climbed to 0.5%, with further increases highly likely. All of this will undoubtedly impact the property market by curbing the growth of house prices in certain regions and hitting borrowers who aren’t on fixed rates—notably those with commercial mortgages or development finance. Our interview with Atelier [p22] discusses this point at length; it’s something all brokers should bear in mind when arranging funding for their clients this year and beyond.

As always, we have an exciting line up of interviews, such as with OSB Group’s Jon Hall [p48]; MS Lending Group’s Rob Goodall [p54]; and Mercantile Trust’s Maeve Ward [p14].

Also in this issue, we talk to a group of brokers about the prospect of a tiered proc fee system [p28]— something we hope will come to fruition in some shape or form, for the good of the industry—and examine the use of tech in conveyancing to drive better customer experiences [p42].

While 2022 is set to be a tough year, we must continue to adapt to and innovate in our rapidly shifting environment in order to survive. And this includes us, too. We’ve been working hard behind the scenes on ways to enhance and invest in what we already offer. To start with, we have officially rebranded to Medianett Publishing, bringing together all of our titles, products and events under one umbrella. We are also investing more time and resource into Bridging & Commercial and how it serves our loyal readership, to ensure it continues to be the magazine of choice for property finance brokers.

We understand that intermediaries are the backbone of the specialist finance market, which is why we have dedicated this year’s Power List to 30 of them who made a significant impression on the sector during the past 12 months [p60]. With a challenging time ahead of us all, we hope their triumphs, large and small, inspire the specialist finance industry to keep on keeping on.

Beth Fisher Editor-in-chief

3 Jan/Feb 2022

“Offering a 70–75% solution to a great developer on a great scheme is far less risky than doing 50% LTV with somebody that doesn’t know what they’re doing” p22 4 Bridging & Commercial

8 14 22 28 42 48 60 76 82 88

The Cut News Exclusive Zeitgeist View Interview Cover story Feature Series Backstory

Eight networks discuss bridging

Mercantile Trust

Challenger banks have been warned

Proc fees reimagined

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8 Bridging & Commercial

The Cut

How are networks viewing bridging in 2022?

Our past research has shown that networks are often underutilised when it comes to bridging finance distribution. However, in 2021, we reported on many new partnerships between networks and bridging lenders, potentially signalling that specialist finance is becoming more of a core activity for them. To find out if this rings true, we ask eight networks whether their appetite for bridging has changed this year and how brokers can expect them to handle cases

9 Jan/Feb 2022

The Cut

Derrick Hyman

Head of specialist distribution at Julian Harris Mortgage Adviser & IFA Networks

Danny Carter

Managing director at Collective Mortgage Network Our appetite for 2022 hasn’t changed, and bridging loans are very much part of the agenda.

Our advisers used over 50 different lenders last year, many of them offering specialist products such as bridging finance, evidencing once again the changing face of the marketplace and the everyday needs of clients. We used some of these providers for the first time and are looking forward to building relationships with others.

As we offer a holistic panel, our advisers place all of their cases directly with lenders. We offer training and support to build confidence for members that are new to bridging (or even if they’re not), and most of our funding partners are always available to provide assistance when needed.

We set up our own inhouse specialist packaging department in 2016, which includes a flexible panel of 10 bridging lenders that we feel is representative of the marketplace. It is mandatory for our members to use this service. We can also look to other financiers if they offer a more suitable and competitive solution for the client.

We support our members by providing a documented advice procedure for bridging finance. We class this lending as high risk, which means all files will be audited. Our process requires consistent, documented post-completion client reviews—and for the file to remain open until the bridging finance has been repaid.

In 2022, we will continue to educate our members with regular webinars delivered by our bridging panel lender partners.

Stephanie Charman Head of strategic relationships at Sesame Bankhall Group

Last year, bridging came into its own for chain-break scenarios and properties looking to meet stamp duty deadlines. This helped advisers gain familiarity with a product they hadn’t considered before, removing previous perceptions.

With the upcoming regulation around the energy performance of BTL assets, bridging becomes another part of advisers’ and landlords’ toolkits, for financing refurbishments and EPC rating improvements.

We see this as a growth area.

We have 15 lenders on our bridging panel; this has increased by 40% over the past two years, with several in the pipeline. Our robust panel appointment process covers a range of due diligence, such as financial stability, compliance, and a commercial review of the lender’s proposition.

Advisers can transact with lenders directly or use a packager—whichever is best for them, their business and the customer.

10 Bridging & Commercial

Kevin Thomson

Sales director at Connect for Intermediaries We anticipate a rise in bridging activity in 2022 due to, among other factors, increased opportunities for investors to expand their property portfolios. This will partly be a result of properties expected to come on the market, sadly due to arrears and repossessions.

Also, the drive for energy efficiency in BTL should see a surge in ‘green refurbishments’, which may require a bridging facility prior to exiting onto a BTL term mortgage.

Connect has over 25 lenders, enabling our ARs to obtain the best terms for their clients across all property types; we are therefore not actively looking for new partnerships.

We don’t use third-party packagers—network members are able to access our broad range of lenders, thereby not adding extra costs to the end client. Instead, we have specialist staff in our internal placement and packaging team to assist with difficult cases.

The Cut

Piotr Twaits

Managing director at Synergy Commercial Finance The bridging market is saturated, but we have a wide range of lenders that specialise in particular areas, such as auction purchases, development, and heavy and light refurbishment.

While we are not on the hunt for new partnerships, if a lender can offer something different for our varied client base, then we’re keen to explore the options.

When handling bridging cases, we use our knowledge and experience of the market to provide suitable lending options.

We are also liaising with the funders on our panel to create a bespoke training programme for our network.

Delivered via webinars and face-to-face meetings, it will cover the various uses and types of bridging available.

Steve Swyny Aaron Noone

Sales and operations director at Master Private Finance As a regulated brokerage working in synergy with JLM Network, we are obligated to provide a whole-of-market, most suitable option for a client. Therefore, failing to have an appetite for bridging is failing in client service.

Some advisers have a blinkered approach to bridging based on a personal interpretation of cost or value for money, or simply refuse to learn about it.

We actively work with 22 bridging lenders; however, six take the vast majority of new business, based on relaxed and effective criteria.

We are interested in fresh relationships with lenders, but will not currently entertain new unregulated partnerships. This is simply due to each lender being a carbon copy of their main competitor, with little to no real USPs or additional positive outcomes for our clients.

Commercial director at F4B Network We’ve always had a strong appetite for bridging. Some of our ARs have actually joined the F4B Network for this reason, as we have an in-house packager to support all their specialist lending requirements—whereas many networks refer these to a third party and split commission with them. We don’t charge any packager or admin fees and pay 100% of the proc and broker fee to the broker.

We have a large number of carefully selected lenders on our bridging panel. We have strong relationships with each, which means we can negotiate exclusive rates and fees and be more flexible.

This year, we intend to hold a number of roadshows and seminars to educate our ARs and wider broker base on the benefits of bridging and specialist lending.

Jonathan Harris Director at Harwell Finance Group (HFG)

Our appetite for bridging finance remains strong, as it has for the past two years since we started operating.

We don’t have a specific panel; we will entertain all potential providers/solutions after carrying out due diligence on the proposition, and we’re always open to establishing new relationships.

HFG treats all cases in the same way, whether they are residential, regulated, unregulated or commercial— and this includes bridging.

All undergo thorough factfinding, assessment and reality checking. There is no need to refer to a specialist packager, but members can do so if they wish—subject to the case being compiled and transacted as per our guidelines.

Bridging will always be seen and treated as a key market area.

11 Jan/Feb 2022

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News

Words by

andreea dulgheru

15 Jan/Feb 2022

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fter years of operating under the radar, Mercantile Trust is coming out of its shell. With fresh bridging and BTL product suites, the specialist lender is ready to flaunt its proposition.

On a Friday afternoon, I spoke to its new commercial director—none other than industry heavyweight Maeve Ward—to learn more about the lender’s offering The name Mercantile Trust will be new to some—which is surprising considering the lender opened its doors in 2016. What makes it even more remarkable is it’s part of the 34-year-old Norfolk Capital Group, which includes Central Trust, the regulated lender that has been providing first- and secondcharge specialist mortgages for decades.

Over the past five years, Mercantile Trust has kept its operations on the down-low. But now, following the appointment of Maeve Ward, it is gearing up to make the entire sector aware of its proposition, and to expand its reach across the UK. This is no sudden decision, but rather a calculated 12-month plan to lay the foundations for an ambitious marketing strategy. Maeve explains that her approach was never to rush, but to ensure every detail was in place before making the company’s offering more visible. “I was only ever going to do this when I could take a step back and say, ‘I’m ready now’ because I can deliver on all of the promises I’ve made.”

Since joining in January 2021— compelled by the group’s long history of high-quality lending and the potential to grow the business almost from scratch— Maeve has been diligently researching the market by consulting brokers to see where the demand for specialist finance lies, as well as gauging how the lender is perceived. On realising it is mainly known for second-charge BTL mortgages, despite its bridging range, she decided to revamp its entire product suite to help escape this pigeonhole and make borrowers and brokers aware of the variety of specialist finance available. “It’s been a real opportunity

News

for us because all of our proposition is about helping the underserved, and the pandemic for some has seen people become victims of circumstance.”

Fast-forward to the present day when, as part of its unregulated bridging loans available in England, Wales and Scotland, the lender now offers firstand second-charge bridging at up to 75% LTV on maximum terms of 12 months. It features four main products: straightforward residential bridging at 0.75%; light refurbishment at 0.85%; heavy refurb at 1.15% and micro loans for smaller advances at 1%. The unique aspect of the bridging suite however is who it caters for, which includes first-time borrowers, and landlords without a main residence or rental history, as well as clients with some adverse credit in the past 12 months.

On top of that, Mercantile lends smaller advances on lower property values, from £60,000 up to 75% LTV. Meanwhile, its BTL range, available in England, Wales, Scotland and Northern Ireland, includes first- and secondcharge facilities at up to 75% LTV, with a starting rate of 7.99%. Maeve explains this is priced for risk, as it focuses on finding lending solutions for those otherwise underserved by the high street. Like its bridging counterpart, the BTL suite is available to first-time buyers, and landlords without a main residence or rental history, in addition to no minimum time employed or income thresholds. Moreover, with a base loan size of £10,000 and lower property values, the range can meet a variety of needs, whether it’s a small paint job, an EPC upgrade or a much bigger portfolio project.

For experienced portfolio investors, the lender offers an open credit facility up to a pre-agreed LTV. This option enables borrowers to draw down funds at any time over the life of the term stipulated by the lender (up to an agreed funding limit), with interest payable only on the amount drawn. This gives landlords the opportunity to present themselves as cash buyers when looking to expand.

At the heart of Mercantile Trust’s proposition is flexibility. This is a key feature of the new mortgage desk, introduced by Maeve, that sits across Mercantile Trust and Central Trust that enables brokers to refer deals outside of publicised criteria to be assessed on its individual merit. Through this desk, intermediaries will have a single point 16

Bridging & Commercial

of contact to discuss any potential deals and are guaranteed a response to their enquiry within two hours. “To me, that’s the magic in any lending. When you look at deals outside the standard terms that present a good customer outcome, that almost becomes your product innovation moving forward,” she explains.

Additionally, the quality of lending brought on by good underwriting standards derives from the regulated business done at Central Trust. Maeve explains that, as the Norfolk Group operates in both the regulated and unregulated markets, certain principles are carried across from Central Trust to Mercantile Trust, despite the latter being unregulated. “We monitor the quality of the business that comes through, the performance on book, and we engage with our intermediaries to make sure that the customers are always in safe hands.”

With the preparation stage now complete, Mercantile Trust is ready to take things to the next level—and it’s aiming high. When asked about plans for this year, Maeve highlights three areas the business will focus on.

The first is promoting its offering across the market. This entails collaborating and maintaining strong relationships with brokers; preserving partnerships with intermediary networks and clubs and joining new ones, including TMA, Connect for Intermediaries and Tenet; and writing educational articles and case studies to illustrate how the lender’s proposition works in practice.

The second phase is venturing into the areas of equitable charge loans, holiday lets, and business loans, with some products set to launch in Q1 2022.

The third is about continuing to build upon its service with a series of initiatives, starting with enhancing its portal by integrating APIs with Equifax, Land Registry and others. This will speed things up (the APIs remove the need for manual data input, which takes time and can cause errors) and lower operating costs for brokers, as the fees for these services are absorbed by the lender. In addition, the business is looking to offer AVMs and in-house legal services. “Mercantile Trust wants to be here for the long haul, but it needs to be known for all the right things. I believe we’ve turned a corner and the market is starting to realise who we are and what we do.”

Maeve Ward

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HEADTOHEAD Words by

BETH FISHER

with the challenger banks 22

Bridging & Commercial

Exclusive

Martin Gilsenan

SINCE LAUNCHING IN JANUARY 2020, SPECIALIST LENDER ATELIER HAS FUNDED AROUND £250M WORTH OF DEALS—£150M OF WHICH WAS LENT LAST YEAR. IT NOW PLANS TO BOOST ITS LOAN BOOK EVEN FURTHER BY COMPETING WITH THE CHALLENGER BANKS IN THE DEVELOPMENT FINANCE MARKET

Last year, Atelier launched its Carbonlite Challenge—an initiative that encourages property developers to create greener homes by rewarding them with rebates on their loans— and shortly after got ISO 9001 accreditation, in addition to moving offices, rebranding, introducing new tech, and embarking on a recruitment drive that led to 20 new hires.

“We now have this platform with amazing people, technology, brand and funding; 2022 is about pressing the button on growth,” states the company’s founder, Chris Gardner.

Currently, its team consists of 27 specialists, including two solicitors, three surveyors and three chartered

accountants. A RICS valuer will soon be joining, in a move that will help the lender supervise the external professional teams and provide assurance. “We simply want to have highly experienced people who can help us navigate through some of the complex transactions we get,” Chris explains.

“That is a point of differentiation. We can often find opportunity where others might see problems.” This wealth of experience translates into individuals having the conviction to make a call on certain deals and situations.

“We’re all property people—and that’s really important,” stresses Martin Gilsenan, Atelier’s director of origination. Against the backdrop of

23 Jan/Feb 2022

Exclusive

“We will be making it very clear in our conversations with brokers that fixed pricing is a huge thing to bear in mind when they’re placing business”

a major skills shortage and ongoing materials price hikes in the construction industry, the in-house surveying team can ensure the numbers work on a deal—even if the development doesn’t go as planned, he adds. “The team is made available to brokers and developers. It’s very popular and helps all parties manage the construction risk.”

For the scale the company is aiming to reach this year, it will require yet further resource. “We’re always looking for good people. Good people make good businesses— not the other way round.”

Being able to underwrite deals from early on in the process means the finance provider can make decisions quicker. “That’s a huge part of the appeal in terms of coming into the market and competing with challenger banks—not just on price, but on delivery,” Martin highlights.

The origination team and function is intertwined with credit, which results in a strong interface between them. “We’re very collaborative.”

Having this expertise on its ‘bench’, as Chris puts it, gives Atelier the opportunity to be flexible in terms of

offering additional leverage outside its existing criteria. So much so, that 70% LTV and 90% LTC are not outlier metrics—they’re the lender’s bread and butter. “Often, there are cases where we prefer to be on a higher leverage with the right developer and scheme, rather than at lower gearing with weak counterparties,” Chris imparts. “For us, offering a 70–75% solution to a great developer on a great scheme is far less risky than doing 50% LTV with somebody that doesn’t know what they’re doing.” Ultimately, a good sponsor will make a deal work.

“A few percentage points on a metric here or there means nothing.”

The business has now secured additional funding to the tune of £200m in a bid to lend £350m this year. The extra capacity will power it to offer cheaper pricing in order to compete with the specialist banks on its lower leverage offering—something Chris believes will put it in pole position.

However, he emphasises this isn’t the sole objective. “This is about us wanting to have a compelling proposition in the senior lending space, one that provides brokers and borrowers the 24

Bridging & Commercial

agility of a non-bank lender, combined with the pricing that competes head-on with a bank’s most prized asset—its ability to offer low rates.”

Chris believes the way the finance provider has organised its pricing will be unique among lenders, in that it will be within the top decile of the entire asset and LTV spectrum, from 55—75% LTV. “To use a consumer analogy, we would be in the best-buy table across all of those,” he claims. For example, a bank will have risk-weighted capital constraints, and therefore while it may be very competitive up to 65% LTV, a development at this gearing that encounters higher costs or a lower valuation may no longer be viable. “All of a sudden, the broker will have to take that deal to another lender. For us, we simply look at that and say, ‘The metrics have shifted—we’re still able to fund it and be ultra-competitive.’”

The company’s unique ownership and funding structure enables it to source cheap lines of capital that don’t constrain its proposition. “That’s one of the challenges you sometimes encounter in this market; people have to find a viable niche based on the price

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of the capital they can raise, rather than finding one and then getting a capital stack to suit,” Chris explains.

Martin highlights that, because Atelier’s interest is fixed—unlike the banks’—it is one less burden for developers. “In terms of the uncertainty around interest rates—because they’re only going to go one way—and cost price inflation and problems in the supply chain, we’ve managed that as best we can,” he notes—“but having one less variable, if I can use the pun, to worry about. It is one of the first questions we’re asked: ‘Do you fix?’”

It’s a good point. An entire generation of real estate property developers and investors have never had to face the volatility of interest rate movements, but it looks like this is coming to an end. “If you think about loan covenants and cost overrun guarantees, these are all things that are going to be impacted by variable finance,” Chris expands.

He describes a situation where if interest rates rise by at least 1% this year, a two-year £10m development loan linked to SONIA could cost the developer £100,000 more. “I can tell you exactly what my cost of funding is, regardless of what happens to the base rate. We will not be putting up the price of any development loan during its term,” he affirms.

Martin talks about how the company continuously listens to its broker partners and sets expectations, and surety of price in development is becoming increasingly important.

“We will be making it very clear in our conversations with brokers that fixed pricing is a huge thing to bear in mind when they’re placing business.”

Technology will also be integral to deals moving forward. In Q3 2021, Atelier used its proprietary tech— dubbed ‘REX’—to launch its borrower dashboard, described by Chris as “an online banking experience for borrowers”—minus the bank. “They can see a breakdown of interest and principal, how many drawdowns they’ve had and got left to go… They can also request a redemption statement and drawdown—all the things you’d expect to be able to do.” He says there have been several instances recently where developers have requested drawdowns while standing in their boots on site. “You’re giving people tools to be able to manage their account, and that can only be a good thing.”

Chris Gardner

“A few percentage points on a metric here or there means nothing”

This innovation also serves to make borrowers more engaged with their finance. “It’s not a black hole anymore,” Chris asserts. “One of the big challenges of any lender that rolls up interest is after you draw down the loan and there isn’t a great deal of interaction with your account. With an online service like this, people can hop on and have a look.” Uptake has been positive, with more than half of Atelier’s loan accounts now being accessed weekly by developers.

When it comes to its tech horizon, the lender envisages that borrowers will be able to input data, such as pictures, directly from site in the future. “We’re definitely looking to see where technology can play a role.

That said, we’re realists. With us, tech is all about supporting hightouch relationships,” says Chris.

Its next step will be rolling out a broker variant of this tech—called ‘Atelier GO’—in Q1 this year, which will allow brokers to submit and track cases, as well as upload documents, online. It also plans to make this available to other third parties, such as independent monitoring surveyors.

What’s more, the Carbonlite Challenge, which has already received “huge engagement” across the industry, will be developed further.

“We’ve had a number of people from academia reach out to us, and from other NGOs that have an interest in the subject,” Chris divulges. “It’s put our name out there into places we would never have expected it to get to.” The company also aims to share its learning experience with a second-charge lender that is looking to produce a consumer product that delivers glazing, heat exchange pumps and electro photovoltaic packages.

In addition, Atelier is preparing to offer larger loans. “We’re looking to be competitive across bridging and development and across assets,” Martin adds. Chris hints that the business may have its eyes on the term space, explaining that it wants to have “more involvement” throughout the real estate lifecycle.

Its new pricing—and ambitions for tech and sustainability—are sure to be keys to success in the future. “I’d be very disappointed if we weren’t at £1bn of assets under management within three years,” Chris concludes.

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In our November/ December issue, we dived headfirst into the thorny topic of a qualification or course in specialist property finance. Amid the debate, the prospect of a tiered procuration fee system was raised. In one suggested iteration, introducers who had a higher level of involvement (the requisite level, some might argue) in a deal— and typically more skill and experience—would be paid the higher amount in the fee range. Similarly, a broker whose lead is simply a name and number for a lender to take forward, or who does not display the necessary ‘credentials’ to fulfil the requirements of the transaction, would be paid less, commensurate with the effort expended or the stake they had in it. This is not an altogether foreign concept, considering the role of packagers to whom less experienced brokers are supposed to refer business that is out of their depth (and which also earns them a smaller fee, but a happy client).

As I am not a broker, I decided to float this idea with a group of them. Towards the end of January, Adele Turton, managing director at Blanc Property Finance; Shaz Ahmed, property finance specialist at GPS Financial; Martyn Pollock, director at Hallcroft Finance; Meir Peer, founder and managing director at Redi Finance; Amar Dhanota, co-founder and specialist adviser at London FS; and Andrew Gage, co-founder of Ngage Finance joined me to deliberate the pros and cons that such a system could present.

Of course, it’s imperative that we follow this up with feedback from lenders— and I cannot wait to hear it. But, by breaking down the conversation, I hope it comes across as more digestible and that the thoughts of various stakeholders can be afforded adequate space to air their views on this important and interesting topic.

As always, we begin by discussing standards in our sector…

Proc fees need ‘shaking up’ Brokers discuss the prospect of a tiered system

Words by

caron schreuder

Zeitgeist

“IF YOU GET SOMETHING THAT’S COME THROUGH FROM ANOTHER BROKER WHO HASN’T GOT THAT EXPERIENCE AND HAS TRIED TO DO SOMETHING THEY DON’T UNDERSTAND, CLIENTS LOSE CONFIDENCE”

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Shaz Ahmed: There’s a big variance.

A lot of brokers know absolutely what they’re doing—they package very well and things get done at speed. But there are also a lot of brokers who are, perhaps, not as into the specialist market, but will still take on these deals and hash it out as they go along.

Meir Peer (ME): I think that’s bang on. I worked for lenders in the past and the variety you’d see… You have a lot of brokers who would literally say, ‘Here’s the enquiry, run with it...

Let me know when there’s funds or if there’s an emergency.’ Then there are some who tick every single box of requirements. That’s what the broker’s there for, really, to simplify, otherwise the client would go directly to the lender.

Amar Dhanota: I totally agree. I think from where we sit, it’s more about niche. You have some brokers, no matter what’s coming through the door, who say, ‘Yes, we can do it.’ A lot of the stuff we get is when someone else has messed it up, for no other reason but that they don’t have the knowledge behind them.

And then we have to try to unpick someone else’s mistakes. It’s tedious.

Caron Schreuder: I imagine this is having a knock-on effect on clients and third parties, too?

AD: 100%. What you find is, if you get something that’s come through from another broker who hasn’t got that experience and has tried to do something they don’t understand, clients lose confidence. You then spend time trying to convince them that you know what you’re talking about … and that can go one of two ways.

Martyn Pollock: In the specialist finance market, especially for unregulated, deals come in all shapes and sizes and various levels of complication. It takes a lot of experience and knowledge to handle the more complex cases—and there are less sophisticated introducers who don’t know what they’re doing.

But, also, many in our market want to offer a larger product set. So, if they do development finance, they might want to offer short-term solutions and larger commercial mortgages. But if they don’t have the grounding in these things, they shouldn’t really be doing this. We also find that some of the regulated guys want

to offer certain unregulated services, and they don’t really perform well. I guess it’s good for us, in some respects, because we can then outperform them.

CS: Would you say that this redirection of the deal, when it has been introduced by someone less experienced, should be done by the lender? Should the introducer be encouraged through a panel of more experienced packagers, for example?

MP: We don’t just act as a conduit for our clients. We’re able to give them our knowledge base and let them get the best ‘dance partner’ to fully understand what they need, so that we can then introduce them to the right quality and kind of debt. I’m loath to put what we have to do on to the lender’s BDMs. I see that too often. I think some brokers know that some of the specialist finance providers have a large workforce, and they can handle that part of the job. We need to step up to the plate and really deliver on that to earn our money and provide the best value for the client.

Adele Turton: I’d like to add that, within the specialist bridging market, there’s a lot of competition and I feel there’s a lot of pressure on volume, which is counterproductive, because we’re talking about quality. Everybody here is of a high calibre. They know what they’re doing.

They can deliver the right debt facility for the right client. It all fits. But when lenders are targeting volume, that’s what they’re getting. There are regulated brokers picking up bridging because they see it as easy. It’s a much higher proc fee than they’re used to. If they’re getting 2% off a bridge versus 0.2% on a resi deal, it’s so attractive. And, unfortunately, our industry is driven by money. I don’t know how we would put a tier system in place… Would it be controlled by the lenders? It’s difficult because you’ve got master brokers and packagers that really should know what they’re doing, but did they get to that status via the volume they’re putting through, rather than the quality of the business? Like Amar said, we get many deals that have been through a few different hands. I can remember unpicking a 20-bed HMO that somebody had decided to split the titles and create leases on, believe it or not. I was, like, ‘Oh my God!’ We had to reverse the leases to try to fix the problem; it took about 18 months. So, quality is definitely needed. How that is tiered, monitored,

categorised… I think you’re going to upset some people with it, but it’s needed.

CS: Well, hopefully, by the end of this discussion, we’ll have an idea of how it could work, and then we’ll put it out to the sector and see how it goes—and we don’t mind ruffling any feathers on the way as well.

Andrew Gage: I’ve been in the market for a long time, so I could class myself as an old-timer, unfortunately, but if I look back to when I started doing bridging in 2008, the standards have gone up immensely, since. Back then, no one taught me and I had no one to turn to. I had to self-learn. Now, we have forums, social media, workshops…

All the awards ceremonies show that the calibre’s gone up over the years.

AT: I feel the only way you get that experience is by being involved with the lender. In other words, the broker does as much work as the lender does, because the lender will push back on stuff. And if you don’t ask questions and get actively involved, you’re never going to learn. I guess there’s a difference between the people willing to do that and those just sending in applications on a volume basis.

AG: I’ll tell you something, when I first started in this role, I had an enquiry on a straightforward £300,000 BTL, unencumbered, to raise £100,000 for another BTL quickly. I picked up the phone to a lender. I spoke to them for maybe three or four minutes, got off the phone, and thought I’m never doing that again, because I literally didn’t have a clue. The only way I could learn about bridging finance was by going through a pack that was completed in the firm I was working with. I looked at all the fees and ripped the deal apart until I understood everything about the case. The next time I went back on the phone, I semiknew what I was doing. So, definitely, Adele, you do need to get interactive with lenders, you need to self-learn and get involved with the actual process.

CS: Is this particular problem not a by-product of the heightened standards and raising the profile of bridging and specialist finance? If we stop talking about record cases and loan amounts, and about how ‘mainstream’ this type of finance has become, it wouldn’t be attracting those

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less experienced brokers. So, is this not necessary for the growth of the market?

AD:. It is adding to the growth. We predominantly started in the residential market back in 2005, and I was learning.

You muddle your way through and get to the next stage as your experience builds.

So, where I sit now in my career, I deal with HNW clients. It was mid-last year that we decided to move into that arena…

I didn’t know what private banks wanted, so I built up that knowledge. Same with bridging and commercial. I’m not scared of saying to somebody, ‘I can’t help you because I don’t have the experience.’

And I think that’s the key. Moving and progressing [is good], but do it step-bystep. That’s what I’ve done and, yes, it’s probably taken me a lot longer than other brokers . . . but I like to feel that I could now speak to anybody with any scenario, whether it’s regulated, unreg, bridging, or commercial, and I have the confidence to say, ‘Yes, I can help you.’ And, if I can’t, I will refer them to somebody.

ME: A good friend of mine, who’s a regulated broker—and this is meant with no disrespect to anyone regulated and coming into bridging—what he always says to me is, with the personal mortgages, the regulated stuff, you have a checklist of what the lender wants, you submit it, then the brokers take a back seat because they have the portal and they’ll let you know where everything’s up to, etc. Once it goes to the underwriters, you don’t really have as much open communication as you do with when it’s unregulated. If I have a bridge, I can speak to the BDM and underwriter, and there’s more room for influence if there’s an issue. When you’re dealing with a bank, it’s black and white.

And I think, coming into bridging, the unregulated stuff, with some of these brokers, that process is just what they’re used to. So, it’s not necessarily that they don’t have it in them; it’s just that it’s a completely different procedure.

CS: How could a tier system look?.

Essentially, there might be a sliding scale of payment, according to what you’re bringing to the table as a broker.

So, whether it’s a ‘back of a fag packet’ level of information, a name and a number, or it’s fully packaged and, to Adele’s point, almost pre-underwritten alongside the lender, there’s a lot between those two extremes. But, for

the sake of simplification, if proc fees go up to 2%—maybe it’s more like 1.5% these days—but if they go up to 2%, then we’ve got a scale starting at 0.5% or 1% and it rises according to the broker’s level of involvement.

This, in our view, will encourage people to get to the stage that will earn them the higher proc fee, thus raising overall standards. Am I oversimplifying it, or could this possibly work?

MP: I like the idea of people trying to be able to prove they’re of a level.

And Adele made a really important point—some of the proc fees are paid to some introducers on the basis of volume, not quality. So, for example, a senior lender might give 2.5% to one brokerage, because they’re a gold star, and 1.5% to a lesser known brokerage.

That lesser known brokerage might do less business with that lender. I don’t think that’s a reasonable way to work.

And then some of the larger bridging businesses, maybe they only work with a certain number of packagers, and won’t work with other unregulated brokerages.

I don’t understand why that’s the case either. It should be about standards. It should be about proving your worth.

CS: Yes, when we’re talking about this, we’re definitely referring to tiers that will be determined by quality, rather than volume.

SA: When it comes to bridging, specifically, there are lots of lenders doing the same kind of thing with the same rates and funding lines. And, at the moment, there’s no real foolproof sourcing system, so it’s largely down to relationships and expertise, and having used them before. And that’s where the skill of a broker comes in. But, if you’re a broker who is used to doing, say, just small bridging loans and now has a commercial conversion that’s just outside your expertise, that’s where a good packager would come in. You’d give them a name and let them deal with it, and they’d agree a fee structure with you.

One thing that could help is if lenders had minimum packaging guidelines, like we have on term loans. As in, the lender will not even take this deal to credit until they have the necessary information and documents. Maybe that would be an idea.

MP: I’d like to back Shaz up on that. He’s spot on. What’s also a bit frustrating is 32

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that sometimes you see less sophisticated brokerages hunting for indicative terms to win business. They don’t understand the deal, or the client, and they’re getting these terms that they think will be attractive to the client. I think minimum requirements for a transaction are essential. And I don’t think lenders should be putting indicative terms out without understanding the deal either.

CS: Shaz, what might those minimum requirements look like in, let’s say, bridging?

SA: If we keep them really basic, one would be proof of deposit. Has the client actually got the money to put into the deal? Also a bit more about their background and assets, liabilities, what directs their strategies, and how pre-qualified that is already.

If it’s a development, who are they looking to use as experienced project managers? This is stuff that will get asked eventually, but you want to have it upfront so it’s quicker on the back end. Adele, what do you think about the proposed tier structure I’ve outlined?

AT: I honestly don’t know where to begin. I think there’s definitely already an unofficial tier system to do with quality and experience and how deals are assessed. On exits and short-term funding, we illustrate the spread of available lenders, their terms, what it’s actually going to cost and any hidden fees, plus a footnote about how they react.

Because criteria are often more important than rates, but how that funder acts is critical as well. You need feedback from the lenders because—and this is where it gets complicated—it’s going to be the lenders that define the tiers because they are receiving the business; otherwise, it would have to be an external body, which is never going to happen. But from that, you’ve then got pre-existing relationships with bigger packagers, master brokers, whoever—how does that fall into this proposed system?

Some of these brokers and packagers are amazing and they’ve got some really good quality people. But they’ve also then got more at a processing level...

CS: Do you have service level agreements in place for lenders? Is this commonplace?

AT: I’d love to. I feel you’re better off having a good, strong relationship with

Zeitgeist

“ONE THING THAT COULD HELP IS IF LENDERS HAD MINIMUM PACKAGING GUIDELINES, LIKE WE HAVE ON TERM LOANS”

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“IF YOU’VE GOT A LESS SOPHISTICATED BROKER WITH AN UNSOPHISTICATED LENDER DOING A COMPLICATED TRANSACTION, WE’RE ALL GOING TO LOSE”

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them, rather than, ‘You must keep to this 48-hour turnaround’, because it simply doesn’t work. You must almost micromanage the process, which is why there is a broker involved, as well as provide the right advice. You are managing it all the way through to completion, not just to offer. Again, your experience matters—legal understanding, for example; dealing with the different complexities in that part of it counts towards how likely the deal is to complete.

And that’s what matters to lenders, really, because they don’t earn until they lend, unless they’re charging upfront fees.

CS: I think what we’re talking about, then, helps them, too, because surely this will increase conversion rates for them and decrease completion times, thus boost their earning potential.

AT: It does. One thing I’m seeing, as well as loads more bridging lenders coming into the market, is more [of them] mass marketing refurb, for example, or development with mezz—all these increasingly complex facilities and structures. And they’re almost simplifying the product, to make it easier to get your head around it—but it’s the complexities within that complicate it. And you only understand and get to know that, as we’ve all said, through experience.

MP: You’ve got to be careful what you wish for, and you’re right, there is a move from not just brokers adding products and services, but lenders. And the less sophisticated lenders coming into more complicated transactions is unacceptable.

AT: 100%.

MP: That’s when your synopsis is really important. You’re spot on with your footnote in relation to lenders. It’s quite a subjective thing to define how they will act or your experience with them. But it’s so important that you give clients that knowledge. I guess that’s another roundtable, Caron, but it’s the quality from the lender side entering that market, too. So, if you’ve got a less sophisticated broker with an unsophisticated lender doing a complicated transaction, we’re all going to lose.

AG: I’m with Adele. If you had a complete reset and started again, and I’m talking about a Men in Black scenario, then you can set up a tier structure…

But trying to do it now... I don’t think it’s possible to put it into play.

CS: Can’t we start now, though?

Can’t we start somewhere?

AG: I think you need the lenders to be on board, for starters. Then you’ve got the issue of so many different lenders out there. I’ve heard of other brokers who would barter with a lender based on commission levels from another provider, regardless of that scenario. So, that lender relents, because they still want the business, so they’ll pay out the higher commission. For me, and probably all of us here, we would be fine because we’re all experienced and I assume we’d get the highest level anyway. But for newer entrants who are not so experienced, it feels more like it’s a bit of a premiership.

Whether it’s going to be fair for everyone in that sense, I don’t know.

slightly awry and the broker was held responsible for lack of fee disclosure. But there is so little of this that it’s quite a difficult thing to use as ‘proof’, I guess.

MP: Yes. But I think that less sophisticated brokers don’t have PI cover. Perhaps this is because they don’t qualify for it?

AT: You touched on negligence and litigation and that, being my background, is the way I tend to look at things. It makes me a bit, let’s say, pessimistic. There’s no FCA involvement. And unless you’ve got very deep pockets and a lot of time, people just don’t bother. It’s a very costly experience. Sadly, it always amazes me.

I do regulated as well, but the difference between PI for reg and unreg—even though with unreg I might have £100m worth of transactions going through in a year, and in reg it might be £10–20m—is massive, and that’s because of the FCA involvement. And I’m not suggesting the ME: But this will all come down to, as FCA steps into our world—which they well, relationships with the lender, what sort of do and don’t—but that’s one of the they’re willing to do. At the end of the day, reasons. So, like you said, there’s no actual you might have a conflict where you say record. I’d say it needs involvement and you were really hands on and the lender’s engagement from lenders for a broker’s saying you weren’t. What do you do then? reputation. Reputation is everything, but then that’s open to interpretation; CS: We get people messaging us through it’s open to who’s friends with who. our website, for instance. If I set out a As Martyn said, a set of particular deal in an email with contact details and requirements with a combination of a loan amount, and I send it on, I’m not other things needs to be put forth. a broker; I don’t want to be involved— but that’s a lead, that’s an introduction.

CS: Just a quick one for the whole panel: does it annoy you that someone could earn ME: Forward it to me next time. the same amount of money as you for a deal that they haven’t put any work into?

CS: [laughter] Okay, noted. I’ll split it six ways, shall I? But that would qualify me for AT: The fact that somebody’s done a 0.5% or 0.8%, or whatever the case is. less work than me and they’ve earned the same amount of money or more MP: You’ve mentioned SLAs. If you could doesn’t actually bother me, because I prove three things to a lender—your want to do things this way. I’m obviously professional indemnity insurance, your a control freak and I like to know that letter of engagement with your client, and nobody’s going to sue me in the future, an SLA with a lender—then the lender is and I’ve done the job properly, there is committed to you to act in a certain way. an exit, and everything’s mapped out.

And if you’re insured, you’re covered for That’s the way that I operate. So, I don’t negligence and other bits and bobs. By necessarily feel bitter or annoyed that doing those three things, I reckon you someone else is being paid the same. qualify for a higher tier of procuration fee.

If you can’t prove them, maybe you’re not. CS: But there are obviously wider consequences if the standards of CS: When it comes to the concept of broking, in general, slide. negligence, there is scant case precedence in unregulated deals to evidence what AD: Totally. When I first started working that might look like. Last year, there in the HNW arena, because I didn’t was one scenario where there was a have any clue, I was happy to get a lower commercial finance deal that had gone commission because, in essence, I was 35 Jan/Feb 2022

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giving that private bank a name and number and letting them deal with my client. But, more importantly, I would say to them that I still wanted to be involved in the process, because that’s how I was learning. I might get paid less, but I was getting experience and learning without disadvantaging my client. So when I’m at that point where I don’t need the lender to hold my hand, then, yes, I should get more money, because I know what I’m doing.

CS: So, doing the best thing by your client may mean handing it over to a packager and earning less, or, in our hypothesis for the tier system, merely introducing to the lender on a basic level and receiving a lower fee. That doesn’t seem to be something that many in the market are very willing to accept.

AD: I think it’s a mindset. I used to think it was a male ego thing, but now I’m seeing it so much in women in this industry. I’ve been in forums where something will be said and, because I don’t understand it, I’ll opt not to comment.

And some women look at me horrified, whereas I see it as a positive. I either need the experience or to team up. For example, on commercial cases, I partner with a broker with 20 years’ experience.

He does the deals and keeps me involved.

Even now, when I understand these quirkier cases, I still run them past him.

CS: Would the return of lenders working with broker panels possibly get us closer?

I know some lenders do still operate panels, but it’s quite rare nowadays to really stick to them, it seems. Could that be a way of not quite going as far as tiering, but the return of some sort of requirement for lenders to work with certain brokers? Then, if they get an introduction that’s outside of that, they’re encouraged to work with that panel.

ME: Like you say, sometimes they still will work this way. At the end of the day, I think what it comes down to, for the client, is the path of least resistance—I always say this to them when it comes to talking about rates or me thinking about what a lender might pay me. You want to get from point A to point B for the client and make it simple and get it over the line.

For me, it’s about relationships, so I could earn less if I go through a packager, but the client will come back to me, I hope.

CS: Do you agree, Shaz?

SA: Yes, I do. When we talk about proc fees, those don’t really exist until the deal completes. So the deal needs to complete with the right lender in a timely way for you to get paid. What I’m not a big fan of is when you’ve got some lenders who have special broker clubs for people giving a lot of volume.

I feel that encourages bad behaviour; it’s rewarding the wrong thing. We should be rewarded for quality cases, which is what we’re talking about, as opposed to how much business we’re giving them.

CS: Let’s discuss the intersection of fee disclosure in our unreg market and this tier prospect. As far as I’m aware, there is currently no requirement to disclose fees. Obviously, as reputable businesses, you may or may not choose to do that—I don’t know what your contracts with your clients look like. But what do you think about how these two concepts connect? I would have thought you’d want to know, as a client, exactly what your broker is earning, but I might be wrong.

ME: I’ll pitch both sides, for the brokers and lenders. There was a point when lenders didn’t even put what the broker was earning, and now it seems a lot of them are including this in their paperwork. As for brokers, if you’re not having the conversation with the client early days about the fee, it’s setting you up for a problem later on.

You have to be transparent with that. I can’t imagine, a deal is almost there and then all of a sudden, surprise, here’s my fee. I can’t see how that would work.

CS: In terms of when you’re going out looking for different lenders, you’re presenting multiple options to the client.

Do you disclose what you’re earning in each scenario to provide full transparency to the client about your motivations?

AT: When I do a synopsis, I disclose the proc fee. And often, I’ll use the lender that pays us the least, because they’re the most suitable, the fastest, and the easiest to deal with for this case. But we do disclose it. If you do charge fees, if you don’t charge fees, why would you not disclose it? If you’re charging fees, then you must have confidence in what you’re doing and why you’re doing it, therefore you should be upfront about it. If there’s a broker fee, we disclose that as well. Why would you not disclose something so important? There was that 36

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case recently, which I believe has gone through appeal now, with the commission?

AG: Is that Wood and Pengelly? [Wood v Commercial First Business Ltd & ors and Business Mortgage Finance 4 plc v Pengelly [2021] EWCA Civ 471] AT: I believe so, yes. Where they’ve not disclosed the commission?

AG: I think the lender went into administration, it went to court, then their client went back a few times and the broker didn’t disclose his commission, which was classed as ‘secret commissions’.

MP: Personally, I believe that we should do away with broker fees. It’s just the way we work and I’m conscious that we all do things in different ways. In our twopage letter of engagement, it’s in layman’s terms. We have a minimum fee for a deal, so that way we get around the broker fee. If that minimum fee can be part of the deal, then it’s great for the client; if not, we will come to an arrangement with them. We’ve got a different fee structure for other types of finance, or if it’s an equity raise, that’s all agreed upfront. It’s highlighted in yellow, too, so if they print it off, they can’t miss it.

We’ve also got an abortive fee, which we collect from them if the deal doesn’t go through and specific things have happened throughout the transaction.

AT: I’d like to see these T&Cs, Martyn. I’m liking this.

MP: That’s fine. I can show you anything you want. And it’s pretty simple. It’s easier to have that than a long legal agreement that’s big and scary and no one gets it. It’s a letter addressed to them. We send it via DocuSign, which is cheap and easy, so you send it through electronically. You both sign it quickly, everyone knows where they stand, you stick it in the file and off you go.

CS: That sounds like a really good belt and braces approach. And, like you say, not buried in legalese.

AG: I’m with Martyn on the layman’s terms, because there’s loads of FCA jargon on the regulated side. Personally, for us, you’re covered on the regulated anyway, because the commission is always disclosed on the ESIS, be it a bridge or BTL or regulated mortgage. I also have

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“I’M NOT A BIG FAN OF WHEN SOME LENDERS HAVE SPECIAL BROKER CLUBS FOR THOSE GIVING A LOT OF VOLUME. I FEEL THAT ENCOURAGES BAD BEHAVIOUR; IT’S REWARDING THE WRONG THING . . . WE SHOULD BE REWARDED FOR QUALITY CASES, AS OPPOSED TO HOW MUCH BUSINESS WE’RE GIVING THEM”

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“IN TERMS OF LENDERS, THERE WILL BE THAT BIT WHERE THEY MIGHT LOSE SOME BUSINESS OR GET LESS OF IT. BUT, IN RETURN, THEY’RE PAYING OUT LESS COMMISSION, SO IT’S A BALANCING ACT”

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a letter which then puts it back into layman’s terms—it breaks it all down bit by bit, highlights what commission we’re getting paid, and confirms that you’re happy with our commissions. And, if a client is not happy with us receiving a commission at the very start, then it was never a client in the first place for me. I would rather put it in that sense, so that there are no issues or comebacks. It’s black and white. We’re almost out of time, but I wanted to give everyone a quick opportunity for any closing comments.

One of the things we didn’t go into too much detail on is exactly how lenders might react to this, but you all touched on it in some way. To me, I feel like they would end up possibly spending less on proc fees, but then there would be an adjustment period when the volumes may be lower, while everyone gets on board with this new market standard.

And that’s a hard thing for a lender. When we look at any standard raising exercise, that limbo bit, while everyone gets up to speed, is difficult for them, because they’re going to have to take a stand to reform practices and possibly lose some business in the interim. I don’t want to put words in their mouths and will ask them in a follow-up piece, but that’s what I’m picking up from this. I think it would be better overall in the long run, but sometimes, the concept of long run is difficult for short-term lenders.

CS: [laughter] Incentives—there’s a topic for a whole other phone call…

Referencing your earlier comment, I’ve possibly done this the wrong way round, because you’re right, the driving of who gets paid what actually comes from the lenders down, as they have the power to dictate the quality of the business that goes through their doors. But I wanted to understand from your perspective what you were seeing in your peer group, which is why I’ve done it this way. I thoroughly agree, though; there’s no point in you guys raising your standards if they keep theirs exactly the same.

SA: There definitely needs to be a discussion around case packaging standards. I don’t think any brokers maliciously go out of their way to give bad cases or deals. But is it capability or documents they haven’t got? In terms of lenders, as you say, there will be that bit where they might lose some business or get less of it. But at the end of the day, in return, they’re paying out less commission, so it’s a balancing act.

AD: We’ll certainly be reading and hearing a lot more about this. I’ve got experience in picking up stuff from other brokers giving bad advice, so something does need to be done.

I’m not quite sure what and how it would work, but for sure, there are some techniques to be tried here.

MP: A final comment from me is that I don’t believe lender panels will drive standards; I think they will drive a lack of competition. We have high standards.

Everyone on this call has demonstrated they do, too. I want to see standards from the banks and funders. There’s a separate conversation we have to have about challenging them on their standards. There was one more point I was going to make… [then, incredulously] Free mobile phones. What the hell? I get emails saying, ‘Come to us and we’ll give you two iPhone 13s.’ What is that?!

ME: The tier system is something that may be possible, and could be trialled, like this four-day work week. Maybe they’re going to grab some brokers and lenders and do some kind of combination and see if they can make it work. I know, for me, I like to be in control of the scenario. When I worked for lenders, and brokers sent me enquiries, even at that point, I enjoyed more direct contact with the client. I like to get the whole picture. But we’ll have to wait and see. If you keep writing about it, then maybe it will happen.

CS: Well, we’ll find out whether the reaction to this is the same as the reaction to the four-day week, which was pretty much a hard ‘no’ across the board. [laughter]

AG: Surely we should be starting off with some sort of qualification for the specialist finance world.

CS: Our cover story in the last issue was all about the advent of a specialist qualification, and this topic has been borne out of that. So, a possibility could be, if there’s a qualification and you get a certain mark or badge as a broker, then you qualify for a certain payment tier.

So that’s how they interact, because it demonstrates your skill in the market.

with morals. So, qualifications, a moral compass, and quality of service are the three things, really. Maybe those could be the tiers. A qualification, yes, is you’re grounding, like a CeMAP, but if you’re literally going after the money all the time, your moral compass isn’t there.

CS: My understanding of the course or the way that we would see it is that it goes much further than covering hard skills; it has to be very much scenariobased to touch on the ethics and the morals you’re talking about. So, when presented with X, Y and Z, how do you approach the deal responsibly? I totally agree with you, Adele, it can’t simply rest on product knowledge, for example.

ME: It would be like having a driver’s licence and still not knowing how to drive. It’s not going to work.

CS: Exactly.

AG: I have CeMAP, but I wouldn’t have a clue how to do equity release, for example.

CS: That’s such an interesting point, Andrew, and I know that equity release is regulated in its own way and it has that qualification attached to it, but you’ve voluntarily said, ‘It’s not an area of expertise for me; I won’t touch it.’

Yet, in the bridging market, when people have no idea what they’re doing, some are like, ‘I’ll give it a go.’

AT: There has to be a willingness within the market to do the right thing, from both lenders and brokers. How you then enforce and monitor that and everything else . . . it turns into such a big job that then doesn’t happen. So, I think maybe a code of conduct that we make the general public aware of, an educational thing—these are the hallmarks you should be looking for. How that translates into how you’re paid, I don’t know. I can see some heads exploding within certain lenders and companies…

It does need shaking up though.

CS: This isn’t a perfect system, but is certainly worth a discussion; the consensus seems to be that something definitely needs to change.

AT: Do you not find, though, that just having a qualification isn’t going to fix the problem? Because the problem is to do 39 Jan/Feb 2022

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WHAT ARE CONVEYANCERS WAITING FOR?

View

Using technology in conveyancing would clear delays at the Land Registry and speed up the process overall, leading to happier customer experiences. Digitisation seems like a nobrainer, so it is inevitable that failing to adopt tech could leave some lenders and lawyers behind Words by

Hannah Godfrey On 4th May 2020, early in England’s first national Covid-19 lockdown, HM Land Registry began accepting documents signed using the Mercury approach. This means that in the conveyancing process, signatories can now print and sign legal papers in the presence of a witness, then a photo or scan of them can be sent back to their lawyer digitally, rather than by post.

This paved the way for wider take-up of technology in the transfer of property. In late July 2020, HM Land Registry began accepting electronic signatures.

The industry welcomed these changes as they helped to handle some of the practical challenges involved in buying and selling property during lockdown.

When Mercury signing was introduced, specialist lenders told Bridging & Commercial that it was a great move, and that they hoped it would push for further technology-driven developments in the sector.

The changes were also arguably well overdue. James Bawa, UK CEO at PEXA—an Australian business that assists lawyers, conveyancers and financial institutions to complete settlements electronically—

claims that not much has altered in the UK’s approach to conveyancing since Victorian times. “It’s increasingly clear that digitisation will help to drive the market towards a better way of operating,” says James.

“In Australia—the first country in the world to implement a fully digitalised property settlement process— buyers, sellers and their lawyers benefit from a simple, online exchange platform.

This is integrated and avoids the need for firms to re-key data, which saves a lot of time.”

True digital conveyancing should improve on the current fragmented process with one that “joins the dots between lenders, lawyers, conveyancers and advisers”, and does not put firms in the difficult position of deciding how individual systems fit with their own operations, he affirms.

Moving the industry forward Similar views are shared by Ryan Cox, general manager of major accounts at InfoTrack.

“Digital conveyancing means a streamlined process for law firms that nurtures productivity

43 Jan/Feb 2022

View

while providing their clients with an exceptional customer experience,” he states. “Looking at housing stock transfer, refinance or corporate securitisation projects, there are several ways technology has helped to speed things up.”

Extract reports are one example.

“InfoTrack provides CSV files that clearly outline all key information in a tabular format against each title, allowing lawyers to quickly filter and investigate key risks identified within the portfolio.”

The company also offers these where environmental and other ancillary reports have been ordered within such transactions.

“This ensures that these projects move along quicker and more accurately for the law firms’ customers. Our clients have told us that each extract report saves two to three days’ worth of investigation and reporting time.”

According to Ryan, legal firms that have adopted e-signing to process transactions are winning more work from specialist lenders: “It’s certainly providing them with a competitive advantage,” he adds.

Edmund Barnes, associate solicitor at Newmanor Law, has seen many of the specialist real estate lenders his firm acts for embrace digital, but claims that some might prefer to avoid electronic signatures because, currently, some documents—such as intercreditor agreements—cannot be electronically signed and registered at the Land Registry.

“If an intercreditor agreement is one of a number of documents in a transaction, the lender might stick to using wet ink signatures for all documents rather than have a mixture of electronic and wet ink,” he explains. “Another reason might be that the lender’s solicitor does not have access to an electronic signing platform that would satisfy the Land Registry requirements for the electronic signing of deeds, such as the need for a one-time passcode.”

At Lewis Denley Solicitors, managing partner Colin Secomb sees digital signing as a positive step forward—for simplifying and reducing the number of hours spent in the conveyancing process. “Before, a lot of solicitors would say, ‘You have to come into the office to sign documents.’

Then they became a bit more pragmatic, so you could go next door and ask your neighbour to be your witness as you signed… Then they’d have to sign with their details, and you’d have to send it back to your solicitor, who would have to post it to the other party, who would do the same thing and post it back, and only then would it go to the Land Registry.”

However, some believe the shift to digital is yet to make the Land Registry phase of the transaction any quicker.

“While the completion and submission of the relevant forms and documents is far simpler than it was by post, backlogs at the Land Registry mean that registration is no faster than it was previously,” observes Tom Hansen, managing director at conveyancing specialist Fletcher Longstaff.

He adds that this bottleneck predates the pandemic “for reasons the Registry has not made clear”, and that it extends to the ‘registration gap’—the period of time between completion of an instrument and the registration of it.

“In most cases, lenders are protected throughout this gap, however, until their charge is actually registered, there remains some risk of non-registration.”

Barriers to wider adoption A simpler, faster tech-based conveyancing process may seem the obvious route to go down, but some in the industry are still hesitant. Colin estimates that around 80% of property law firms have not adopted digital signatures.

This means that those who have are not always able to use their digital processes.

“Land Registry requirements for a fully digitised document mean all parties have to agree to it. While we might be willing to do it and set it up, if one party says, ‘No, I want to print and sign it,’ then no other person can do it electronically,” he highlights.

Colin also cites struggles around choosing and implementing the right technology and the expense as hurdles.

“A lot of legal tech costs a lot of money, and the providers haven’t made it easy for clients to use,” he says. “If you look at their pricing and subscription models, with a lot of them, if you want to change software, it’s going to cost thousands of pounds to transfer the data and information elsewhere. This model is quite archaic to modern tech generally outside the sector, and the ability to change is really hard.”

Furthermore, he says, there’s not much customisability, “which hinders the process as every firm works slightly differently”.

Ryan puts change management at the core of why digital processes have not been more widely embraced. “It can take some time to transition processes, especially for larger firms. In our experience, it’s not a lack of willingness or interest in wanting to go digital, but rather how and when.”

He adds that finding the right solution to fit an individual firm’s needs can also 44

Bridging & Commercial

take time, especially when numerous stakeholders are involved. “However, we’ve seen the trend towards adopting digital conveyancing accelerate throughout 2020–21, and expect this to continue into 2022 and beyond.”

Tom believes the industry’s main concern centres on a perceived increased risk of fraud. “Any digital solution will need to have robust and ongoing fraud prevention mechanisms, which can be relied upon by conveyancers,” he asserts.

“Too often, conveyancers are held accountable where fraud occurs, as they have insurance which will pay out. While this attitude persists, conveyancers will be reluctant to embrace developments that increase their exposure to claims.”

Meanwhile, Katie Jackson, senior associate at Howard Kennedy, argues that there are good reasons why the legal sector is often slow to respond to technological advances.

Solicitors, she explains, are frequently instructed on complex and valuable assets and therefore should not be used as a trial ground. “Often, the legal profession will pick up on the changes once they have been well and truly tested in the market and by other sectors of the economy, with any bugs ironed out and a full understanding/ mitigation of any risks to process.”

Katie is cautious about the future of digitisation, pointing out that lenders have the most to lose if the conveyancing of a property is not carried out properly.

“A lender needs to have a solicitor who has a thorough understanding of their scope, regularly practises in the area and is up to date with the ever-changing regulations and laws.”

She acknowledges the need to keep up with tech to meet the demands of consumers and not be left behind. “However, it is with a slow and steady pace—and with a full and practical understanding of the relevant risks—that changes to technology should be embraced and implemented.”

What’s next?

Colin believes the move to digital is unescapable, and that it should happen sooner rather than later. “We love our tech and see the benefits of it,” he enthuses.

“Land Registry is fantastic at pushing digital: the tools it provides are excellent, and it’s offering an efficient platform to move forward.” He highlights the Land Registry’s open source APIs, which allow software systems to interact directly with its database, so you don’t have to go through its portal to obtain free information on titles.

View

There is also a ‘sandbox’ area, he notes, where developers can test new technology.

“And they provide all of that free of charge.”

Digital adoption would also minimise the need for human processing at Land Registry, Colin continues. “The staff must go through tens of thousands of pages of paperwork each year. If that was read by computers rather than individuals, it would reduce overheads and be much quicker as it could effectively work 24/7. It would be a gamechanger.”

Colin would like to see other law firms getting “up to speed” by making the effort to go digital. “That would improve Land Registry and make it much better for customer service as it would improve the industry’s service overall.”

Tom says a number of specialist lenders will soon operate almost entirely electronically in their dealings with property firms, which could hasten the wider adoption of digital practices among law firms. “Whereas 10 years ago all requests were by fax, many specialist lenders will now allow for requests for funds by a secure portal,” he explains.

“This is a far simpler and faster method of operating. The next phase will be for all lenders to use such platforms and methods for communication.”

So what does he think conveyancers want in the future? “Broadly, conveyancers would like transactions to be smoother and faster, both for their own and their clients’ benefit. There is a negative perception of the conveyancing industry, both from outside and within, that it is slow and does not deliver value for clients. There is a range of opinions as to why this is and how this is resolved. Most conveyancers would like changes that address this view of them.”

Out with the old The shift to digital is happening, but will those who do not swiftly adopt the technologies be left behind? Colin feels this is a cliché, especially as “law firms are some of the last to adopt technology anyway”. Nevertheless, he feels that “the line in the sand is coming closer”.

Turning to specialist lenders and their future, he suggests that people operating in the sector may be keen that they, and those they work with, go digital soon because of the nature of their work. “Specialist lending has a sense of urgency,” he says. “It’s specialist because someone wants it done quickly, or there’s a reason it needs doing.”

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Jon Hall

Interview

HEADLINING AT OSB In November last year, Jon Hall became OSB Group’s new managing director of mortgages.

I sit down with him to discuss his journey in the specialist lending market so far, his vision for the bank to become the UK’s number one specialist lender of choice, and our shared love of music festivals

Words by

BETH FISHER 49 Jan/Feb 2022

Interview

on—who describes himself as “motivated, conscientious and sociable”—has been in the specialist finance sector for 20 years, and his career path has been an impressive one. He has held positions at PwC, Aviva (where he was involved with its ISA launch) and Central Trust, before becoming one of the youngest building society CEOs at Saffron. While there, Jon helped facilitate a funding line deal to bridging lender Masthaven in 2011. Three years later, he steered Masthaven through the process of obtaining its banking licence as its CCO and deputy CEO. Despite his pivotal roles in these organisations, Jon is quick to point to the people he worked with in making great things happen. “When I look at successes, I think of who was there, how they approached a particular opportunity and responded, and how we all developed as a team and individually,” he says.

One thing that strikes me is Jon’s clear view of the shadow he casts as a leader. “You need to be aware that every time you are leading a business, you’re public property; people are looking at how you’re behaving and will reflect that. Therefore, you must recognise that when under pressure—and there’s been a lot of that recently—staying calm and consistent is really important.” Jon believes that investing in leadership is “vital” and has to be worked on continuously.

I’ve had the pleasure of knowing Jon—whom I’d describe as assiduous and confident—for many years, and I’m surprised to find out something new about him each time we speak.

“What don’t we know about you?” I ask.

He pauses to think: “I’ve got very diverse music taste,” he replies. As someone who likes everything from 50 Bridging & Commercial

country and folk to neo-soul and psychedelic rock, I put down my notepad and decide we’re going to spend a solid 10 minutes discussing this.

“I love a gig and a festival; I like anything from The Killers and The Weeknd to Drake,” Jon shares. He reminisces about the last time he went to Reading Festival, in 2014, when the Arctic Monkeys and Blink-182 headlined. I start telling him about when I saw Metallica there, but I notice the clock ticking. We’ve carved out only an hour for this interview— after all, Jon’s got a bank to run.

We swiftly move on to considering how the specialist finance sector has evolved over the past two decades— and its multiple cycles—since Jon started out. While there have been numerous significant changes, he feels the focus around flexibility and adaptability has consistently remained.

Interestingly, Jon believes the real innovation in the industry stemmed from the first new banks and building societies that entered the market around 10 years ago, rather than the non-bank lenders that have fuelled it recently. “There’s a mass of specialist lending organisations; competition is great for customer choice. But, at the moment, I don’t necessarily think it has stimulated any great amount of innovation,” he observes.

When asked what potential he sees in OSB, and why he decided to take on the position at the specialist lending and retail savings group, Jon says he has always admired the organisation and feels “very lucky” to be joining it. “In terms of the years I’ve spent in the sector, it feels like it has been building towards this,” he shares, stressing that he’s always been keen on being part of a growing business, with a focus on the growth and

Interview

performance of the people within it.

Describing the combining of OneSavings Bank and Charter Court Financial Services during a pandemic as “remarkable”, Jon tells me we will now start to see the benefits of this, in terms of the regularity of new product launches, enhancement of service, and the development of technology to improve the customer and broker experience. “It doesn’t happen in one day, but that will be the direction of travel.”

“I come with a track record of delivering change, innovation and sustainable growth in specialist lending and retail banking, so that’s clearly what I will be expected to continue with,” he asserts. And he has a good foundation to work with. According to its latest trading update, the bank delivered £1.1bn in organic originations during Q3 2021—a staggering 46% surge year-on-year.

Jon believes the group has a big opportunity to demonstrate the value of its individual brands— Precise Mortgages, Kent Reliance for Intermediaries, and InterBay—and show how they work and blend together. To do this, he plans to drive a regular stream of new products and service enhancements this year and beyond, which has already started with the launch of its new semicommercial and commercial finance range from InterBay in January. “You can also expect InterBay to move back into refurbishment and commercial bridging,” he reveals. Moreover, he divulges that we will see a higher level of bridging lending from Precise Mortgages over the next 12 months than we did in the previous two years.

To maintain its position as a major specialist finance lending brand, OSB also plans to start leading and working with the market when it comes to

“YOU NEED TO BE AWARE THAT EVERY TIME YOU ARE LEADING A BUSINESS, YOU’RE PUBLIC PROPERTY; PEOPLE ARE LOOKING AT HOW YOU’RE BEHAVING AND WILL REFLECT THAT”

property emission targets. “There are some big commitments the group is looking to make in that space.”

In addition, Jon feels there is scope to rethink and evolve the way its brands do residential lending. “There’s a huge demand for specialist products that are flexible, reflect what individual borrowers are trying to do, and recognise that a mortgage product needs to change as a person’s life does.”

Jon adds that advancing the way in which technology and data support the broker and customer experiences will be key to this, with “phenomenal opportunity” for an even greater personalised solution in the specialist arena. “This will take the market a significant step forward in connecting end-to-end property ownership and financing,” he says. Nonetheless, he warns that deploying tech “in a mainstream way” will disenfranchise what specialist intermediaries are trying to do, and that it must proceed in a way that helps and supports how customers want to borrow money.

By the end of this year, Jon aims to retain a significant number of OSB’s customers during a time when many of them will be coming off their previous fixed-term rates, particularly in BTL. “It’s vital to have a very joinedup retention experience, including attractive offerings, as well as new business. Retention and recommendation are fundamental,” he states.

We end with an agreement to “do lunch soon”, and I look forward to talking about what he has planned next in his great ambition to make OSB “the UK’s number one choice of specialist bank”… Although I am sure the return of Arctic Monkeys at Reading this year will also come up in conversation.

51 Jan/Feb 2022

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Interview

Learning from the biggest

Rob Goodall Since its launch this time last year, MS Lending Group has amassed a loan book of more than £30m—and, with new funding in the wings, it has an eager ambition to amplify this in 2022.To assist with the evolution of the business, the unregulated bridging lender announced last month that it had snapped up ex-Together specialist lending head Rob Goodall as its new managing director Words by

BETH FISHER

I

n his new role, the chartered surveyor—who has almost 29 years of experience in the property industry— will focus on growth opportunities in specialist lending and work closely with brokers to develop the business. I speak with Rob to see what he has planned.

Why did you decide to join MS Lending and how will your prior experience help with its expansion plans?

I was looking for a fresh challenge outside the corporate environment and a business with entrepreneurial flair.

MS Lending and, more importantly, its founder and CEO Michael Stratton, have that—and I’m excited to be part of the journey. While working at a large lender previously, I had exposure to all types of securities, customers and loan sizes. There is very little I haven’t been asked to review. Being involved in the end-to-end process will ensure that this experience can be used to maximum effect moving forward.

How did you get into the bridging industry and what lessons have you learnt throughout your career?

I had acted for a very successful businessman for many years, and he approached me to work as a consultant in his development funding business. I did this for five years, which gave me an understanding of the sector. I had known Henry Moser [founder and group CEO of Together] and Marc Goldberg [commercial CEO at Together] for over 20 years when they asked me to join— initially as a consultant, before going full time. I knew Together was a big business, but never appreciated the size and scale.

In terms of lessons, I’ve been fortunate to work alongside and gain knowledge from some of the biggest names in the property sector: Fred Done, Tom Bloxham and, more recently, Henry.

His mantras are ‘skin in the game’ and LTV—something I will always remember.

I have learnt to never be afraid to challenge opinions, and to be open,

54 Bridging & Commercial

Rob Goodall

Interview

honest and transparent. It’s also important to manage expectations and provide a clear rationale behind your decisions.

The business recently expanded into Scotland.What other areas and sectors are you eyeing?

How does being a chartered surveyor give you a unique skill set as MD of a young lender?

We’ll be branching into smaller developments and working alongside local developers. We’re also going to be focusing on sustainability and ensuring our products help suit those who are conducting business with this in mind.

I have been qualified since 1997 and been involved with all aspects of the property sector—from sales and lettings, valuations and rent reviews to investment acquisition and strategic advice. This market is about common sense, and putting my property expertise alongside my lending experience will enable the business to grow strategically.

MS Lending aims to grow its loan book to £40m this year. How will you help to achieve this?

My experience and knowledge, as well as my contact base, will help to increase the loan book, while also ensuring the business’s foundations remain in order to manage this. The fundamentals are now in place to get us to whatever levels we need and want to get to. If these are right and stay consistent, the rest will follow.

How does your new funding align with your lending ambitions?

MS Lending is always focused on offering the best products to its customers and is fortunate to have secured a funding line that allows us to do this. We have obtained a fund that is tailored to how we conduct business, so we can continue to operate in the way that suits our customers, while also developing the business. Often, the fund dictates the lending; in this instance, we are the lender and we are dictating the fund.

Will you be recruiting further this year?

How will your new ESG offering make a difference in the property lending market?

We have created a specific product with the aim of building awareness of leading ESG actions, taking time to understand current practices and exposures, and manage ESG appropriately going forward.

Importantly, we have developed a robust strategy that is integrated into the overall business. We have carefully considered how we can encourage borrowers to improve their ESG performance and are doing this through financial reward. For instance, clients will benefit from a 1% refund of the total gross loan amount on redemption when enhancements to the EPC rating are made.

What threats and opportunities do you expect the bridging market to face this year, and how will you plan for them?

In a nutshell, challenges include residential values struggling to match the continued rise in build costs, uncertainty, the return of repayment plans, and a reduction in the number of valuation firms due to excessive PII. In terms of opportunities, I expect there will be some in the retail, leisure and hospitality sectors for the brave (and savvy) investor. I also foresee the repurposing of tertiary shopping centres for alternative uses, and a greater demand and focus on ESG investment.

Absolutely. In addition to me, we have two new hires who recently started.

We’ll never rule out hiring more; we need to grow as the business does, and be sure what we pride ourselves on—which is the experience for the customer—never falters.

56 Bridging & Commercial

Interview

“Often, the fund dictates the lending; in this instance, we are the lender and we are dictating the fund”

57 Jan/Feb 2022

01204 328477 www.pmjcapital.com

Straightforward Property Finance

2022 Recognising the exceptional brokers of last year

Cover Story

POWER Would you believe this is our third Power List? So far, we have highlighted 35 of our market’s biggest success stories under the age of 35; 40 individuals who went the extra mile to keep the wheels of the market turning during the pandemic; and, now, 30 brokers who went above and beyond during 2021. We really enjoyed reading through the hundreds of nominations and found it tough whittling it down—but we believe we have made the right choices with our final selection. Everyone on the following pages should be incredibly proud of what they have achieved in the past 12 months. We hope that your victories, large and small, will inspire the specialist finance sector this year. In the nature of transparency, while we were overwhelmed with submissions—some of those on the list received a huge number of votes from their peers—we are disappointed with the lack of diversity in this year’s line-up. We want our Power Lists to be representative of everyone in society— something the industry is also striving for—and we urge all our readers to consider this when nominating peers and colleagues in future editions. Luckily, we have a fantastic feature that discusses all things D&I on p82 which we trust will help get more people talking about this important movement and lead to a more inclusive show of faces in next year’s Power List and beyond

LIST 61 Jan/Feb 2022

Cover Story

Alison Houghton-Corfield

Callum Taylor

National relationship director at Master Private Finance

Director at Portway Finance

Working with Alison in successful attempts to generate change, new ideas and strategies is said to be “fresh, energetic and exciting”. She has used her voice positively, constructively and fearlessly for everyone who feels they want change within the industry and for those who are somewhat anxious about speaking up around discrimination, inequality, racism and inappropriate banter/behaviour. Alison has had concrete experiences of all the aforementioned and has put her head above the parapet to help stamp it out and create positive change in a professional, inclusive manner. She has also been involved in numerous industry discussions, roundtables and events in order to do this and has solid goals for 2022 to improve D&I within the sector.

As a broker who has a constant eye on a client’s long-term interests, Callum is said to be always available for input and adds value to every step of a transaction. His excelling communication, expertise, attention to detail and strong relationships with a plethora of banks has given his customers—who trust him implicitly—best results. He has also worked tirelessly to obtain the optimal solutions for his clients by negotiating with BDMs, valuers, and solicitors to complete deals quickly.

Jo Breeden Managing director at Crystal Specialist Finance Jo’s leadership at Crystal during 2021 resulted in business volumes surging; the company completed a record-breaking £300m of specialist transactions. It also grew its staff headcount beyond pre-Covid levels to 52 FTEs and increased the number of contracted distribution partners. Jo champions fairness and promotes zero upfront fees.

He has also focused on delivering outstanding customer outcomes via a whole-of-market offering, having completed cases with over 55 lenders last year. Lastly, under his management, Crystal achieved a seven-figure profit.

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Clare Jupp Group director of people development at The Brightstar Group Clare is a passionate driver and ongoing spokesperson for the Women in Finance initiative, not just within Brightstar, but across the entire sector, where she has got people talking and, more importantly, taking action. She has supported and expedited definite progress and change. Throughout 2021, Clare advanced programmes internally and shared best practices industry wide—including with competitors.

She is described as an excellent role model for the women at Brightstar, and has helped them to build their personal confidence and profile. In the past 12 months, the group had more female nominations and finalists than ever before in industry awards.

Clare was also invited to participate in The City of London’s International Women’s Day event, a celebration of the role of women in lockdown and responding to Covid-19. In addition, she attended the ‘Celebrating Women in the Mortgage Industry’ panel webinar; was a guest speaker at the Alexander Hall Inspire 50 event; and held groupwide workshops for the women of Brightstar and Sirius, which focused on the outcomes of an International Women’s Day survey completed by everyone in the company.

Craig Smith Head of new business development at VIBE Specialist Finance

Colin Anderson Executive director at LDNfinance Colin’s expertise is described as second to none when it comes to creating solutions for highly complex situations. An example of this last year was when he was approached by a client who owned multiple residential, semi-commercial and commercial properties through an offshore limited company that was in financial difficulty with an incumbent lender. Colin put together a competitive finance package which enabled the assets to be split, and negotiated with the finance provider to prevent the limited company client from being placed into receivership. Colin is an important figurehead within the business that the team relies on for advice and guidance. His personal performance has caused new and emerging administrators within the team to approach Colin for his knowledge and experience, especially during early phases of training. He has also played an integral part in enhancing the overall expertise of the specialist finance team through overseeing various lender research projects. For example, the compilation of data which illustrates which senior/junior lenders have the most productive working relationships, which has been essential for development deals that needed to be concluded within a short timeframe.

Having worked as a BDM in a completely different industry for the past 10 years, Craig made the bold decision to move into the specialist finance arena 12 months ago. He initially shadowed Kim McGinley, director at VIBE Specialist Finance, to get a head start at gaining an understanding of the market, before beginning a role as a trainee adviser.

As someone new to the industry, Craig has hit the ground running and built a sustainable pipeline of clients, while providing a top level of service—even in challenging cases.

Off the back of his onboarding and sales activity success, he was promoted to head of new business development in August 2021. Craig also went on to win Rising Star of the Year at the British Specialist Lending Awards.

Sam O’Neill Head of bridging at Clifton Private Finance Sam was promoted to head of bridging and contributed to the company’s ‘Bridging Broker of the Year’, ‘Broker of the Year’ and ‘Regulated Broker of the Year’ award nominations in 2021. He is consistently one of the highest performing brokers at Clifton, while building a team in a completely separate office and country to its HQ. He has helped nearly triple the adviser count in its Cardiff office and implemented structures within the business to increase standards in the bridging team. He is known to chase outstanding items from third parties on behalf of his client and streamline the lending process. On top of this, he is courteous with solicitors and treats them like his own colleagues.

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Haydn Thomas Chief commercial officer at Cornerstone Finance Group

Luke O’Sullivan Bridging and commercial manager at The Loans Engine Luke always ensures he finds the best solution for his clients and that the underwriting aspect is as smooth as possible. He is present throughout the deal chain through to completion and is said to have fantastic knowledge of the expected exit so he can be counted on to discuss a case in full. Luke’s lender knowledge also allows his submissions to be extensive in the relevant information. He is known to do whatever it takes to make a deal work and always exceeds his clients’ expectations. One lender explained that Luke gives full disclosure on the source of funds and stays in touch with all his clients post-completion. His high level of repeat business indicates how much his customers appreciate what he does. Luke’s in-depth expertise, supportive approach to onboarding and training, and great leadership skills have resulted in a high performing, committed team that reflect his core values.

Throughout 2021, Luke helped the business increase volumes across regulated bridging, semi-commercial mortgages and complex BTL finance to a point where record levels of sales were being achieved, despite there being a decline in commercial mortgage products. Regardless of the challenges created by the pandemic, lending arranged by TLE’s bridging and commercial team has tripled from 2018 to 2021—a fantastic endorsement of Luke and his team’s success.

Since joining the Cornerstone Finance Group in January 2020, Haydn has driven exponential growth in its commercial finance arm, from writing £15m of deals in 2019 to £101m in 2021. His organisation of and attendance at networking events has resulted in over 80 new lender connections in the past two years. In May 2021, Haydn spearheaded the launch of Cornerstone Capital, the group’s direct bridging funder for South Wales and South West property clients.

Towards the end of last year, Haydn introduced Cornerstone International—a new offering that specialises in hassle-free international payments and finance sourcing for UK businesses trading overseas. Throughout the wider group, Haydn played an overarching role in recruiting senior bankers into key positions. To support the company’s transition throughout the pandemic, he invested over 100 hours in training the commercial team as part of their CPD. Consequently, they continued to trade successfully and remotely when required.

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Alice Williams Director at Pilotfish Finance Alice is consistently working towards improving the reputation of the industry. She works hard to give her clients the highest level of service, while also extending a range of free educational resources to remove the barriers to finance for property investors and developers—most notably via the introduction and ongoing development of the Pilotfish Academy, a free online property finance training course. Alice regularly presents at property networking events to support multiple mentorship groups with financing queries, and is said to consistently put her clients at the forefront of everything she does. In a move to continually improve her clients’ experience, she has overhauled Pilotfish’s client journey alongside its head of engagement.

Joe Guilfoyle Development finance consultant at Aureum Finance Joe works around the clock to maintain close relationships with clients, lenders and equity funders. This allows him to provide 100% LTC finance on many of his development deals, which has been instrumental to the growth of multiple property investors’ portfolios. One client described Joe as “very responsive”, going the extra mile to help with finance requirements. Defined as “approachable” and “keen to share his knowledge”, he has also introduced clients to schemes to purchase, while providing the finance. One person said that Joe deserves recognition for “helping developers achieve their dreams”.

Elise Taylor Finance broker, Aureum Finance Elise was promoted from relationship manager to finance broker in May 2021, and has already sourced several clients and assisted on numerous complex transactions. On certain deals, there have been significant challenges with valuations, government grants and planning issues. However, Elise added value by taking on and working through the challenges in order to complete the loans, but also to achieve better funding for the clients. Furthermore, she assisted two developer clients in selling their sites, offering another example of providing more service than a broker may be expected to.

Jake Ralph Bridging loan adviser at Positive Lending Jake is defined as “simply sensational”, with his attention to detail and desire to deliver for his clients making him one of the best performers in the company. He doesn’t just work hard on the advice and processing of loans, he also thinks explicitly about how to make the process faster. For example, Positive Lending has benefitted from quotation software that Jake has written in his own time and which allows brokers and clients to be sourced and placed with the appropriate lender in minutes, with a full breakdown of costs—very similar to how an ESIS works in the mainstream market. Jake has also written tens of millions of pounds of development finance in 2021. His analytic approach to structuring a loan for the benefit of his clients makes him one of the most respected young brokers in his field.

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Joseph Aston National sales manager at Vantage Finance Joseph is considered his MD Lucy Barrett’s right-hand man and the backbone of Vantage.

In 2021, his hard work played a pivotal role in the team completing 673 cases and £200m of drawn down loans across specialist lending products.

On top of this, the business reviewed over £1.3bn worth of enquiries last year and supported a record number of brokers when the market needed them most. Being involved in the full lifecycle of a case, as well as managing the relationship with the broker, is said to be a rare, integrated position—and it is this that makes Joseph unique.

He ensures every case is handled with speed, efficiency and professionalism.

One lender said that Joseph will always engage before submitting any truly specialist cases, and the way in which he packages a deal makes a real difference to how quickly and efficiently they can give him a decision.

In 2021, Joseph managed to complete £16m worth of loan facilities alongside running the sales and operations within the business. A colleague stated that Joseph always steps up to any challenge thrown at him, and his knowledge and understanding of the business and the markets Vantage operates in have excelled over the last two years. In addition, he was able to grow the master broker’s distribution network of introducers to enable the business to have a record year in 2021.

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Aaron Noone

Peter Williams

Sales and operations director at Master Private Finance

CEO at Propp

Since Aaron became a leader at Master Private Finance, he has used his position not only to improve the customer journey, but to loudly advocate for change in the industry.

As a gay man in a predominantly heterosexual industry—which can be a lonely place when you are seeking progress for minorities—Aaron takes it in his stride. He has also helped raise the disproportionate number of female advisers in the industry and changed internal processes to ensure women receive adequate training, qualifications, fair pay and equal treatment. In addition, while others increased fees during the pandemic, Aaron found ways to remove them on bridging loans. He also got rid of employee targets by replacing minimums and expectations with only one metric—service. Despite the initial nerves, it paid off; service reviews are currently at five stars on TrustPilot.

Aaron has also recently embarked on an eco-campaign to review how the business can be net zero and work with the local community.

Miranda Khadr Founder of Yellow Stone Finance and CEO at Pitch 4 Finance Under Miranda’s leadership, since July 2021, Pitch 4 Finance has grown its monthly borrower registrations by 257%, with a total of £12.5bn worth of enquiries on the platform since inception. Miranda is said to have gone beyond the role of the traditional broker with the launch of Pitch 4 Finance. She offers training and her expert advice to anyone from one-man-bands to packagers and has enabled many brokerages to grow and complete complicated transactions they would have previously struggled with. Pitch 4 Finance does this as a discreet service, showing that Miranda is not after the glory, but to truly get clients the best financial solutions. She understands that it is not possible to retain knowledge of the entire financial market in our minds, and therefore created technology that helps plug the limits of human memory and enables brokers to offer clients the best solutions in the market. While raising three children under five, she is said to be on the phone speaking with clients until 9pm every night of the week.

One lender highlighted that Peter always goes the extra mile for his clients, even if the deals are complex and change along the way. His ambition to improve the reputation of unregulated specialist finance and desire for increased transparency to ensure that brokers are working for the benefit of borrowers, is applauded.

One colleague noted that Peter genuinely puts his money where his mouth is when it comes to company values, and places customer needs above profit. His thinking is understood to challenge the old way of doing things, and means that clients are getting the best deals on the market, which will also drive the competition to improve. It is said that on several occasions, Peter has exceeded expectations for clients let down by lenders withdrawing their offers at the eleventh hour. His relentless drive for improvement and innovation is creating a reputation where borrowers are attracted to his transparency when it comes to advice, rates and costs.

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Alastair Hoyne Principal at Finanze The customer service, attention to detail and advice from Alastair have been labelled as “exemplary”.

One client said they have made a business relationship “for life” due to his care and consideration when finding funding options, and he is complimented on having brought private banking to the specialist finance world. He commits the time to listen to his clients’ personal requirements and focuses on researching and informing them of their options. Since launching in September 2021, Finanze has issued terms on £30m of loans, representing £44m of property transactions.

Alastair will call 50 lenders to get the best possible deal for a client, whether it’s the lowest blended cost of debt—taking into account rate and fees—or maximum leverage. He has even helped cut rates and arrangement fees for his clients, reducing one client’s overall costs by 1% over one year. Alastair has also created custom products with lenders, such as for foreign nationals where they lacked a UK credit history and consequently couldn’t get access to competitive rates. Another offering he has helped form revolves around the strategy of ‘title splitting’, using a specialised bridge based on the split value. Alastair spoke with over 100 lenders to find one that was willing to support the idea— and he now has exclusivity with them.

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Emma Ross Commercial manager at Watts Commercial Finance Emma is described as a “superstar”, “an asset to the commercial lending sector” and having “brilliant lender knowledge”. She is known to answer emails at all hours of the day (and night), confirming her commitment to overachieve.

Emma is always on hand and willing to help with complex commercial queries, no matter how niche the case is. Her access to a broad panel of lenders and relationships has meant that she can find a solution in almost any situation.

She is said to always do what she says she will and takes a personal interest in each client and their business to ensure that the advice that she provides is the best. She looks at all aspects of finance to save the client money, in addition to considering intuitive funding arrangements and products.

George Wells Specialist finance consultant at Finspace Group While relatively new to the industry (George has been a specialist property finance broker for just over three years), his self-learning and understanding is labelled as “nothing short of outstanding”, and numerous people from outside the company are led to believe he has been in the market for his entire career. His grasp of borrower requirements—such as planning consent, taxation, property sales and other relevant trends—adds more to the client-broker relationship.

A lot of George’s customers deal with ground-up developments, and he manages the process even post completion—including the drawdown of funds. He always visits a site, and clients, of whom have great things to say about him, come back time and again for subsequent projects.

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Rob Jupp CEO at The Brightstar Group Rob remains a significant voice within the industry, and his vision, courage and tenacity has enabled the continued growth of the business through good times, those of economic uncertainty, and during the global pandemic. With Rob at the helm, the group, (including Brightstar and Sirius) has twice been named the Sunday Times’ ‘Best Small Company to Work For’. In the wider marketplace, Rob has been a source of encouragement and support to many throughout the challenges of Covid and is a highly valued industry commentator. For example, his CEO vlog provided weekly updates via social media, aiming to bring together the key moments and green shoots of the specialist finance market during these unprecedented times. With a growing audience each week, these broadcasts helped shape a message of ‘hope and faith’ for the future and confirmed Rob’s status as a leading light and an industry ‘friend’.

Post-lockdown, Rob has continued to play an active role in online webinars and forums as both host and guest.

Additionally, the strength of his relationships and colossal reputation have resulted in the successful completion of some of the largest specialist deals within the industry. He has also always participated in steering projects that ‘give back’, including the Mortgage Sleep Out and other charitable work. As a strong advocate for the advancement of women in finance, he supports and embraces diversity and inclusion. He continues to push for greater skills and education— especially through a bridging qualification—and aims to encourage the next generation into our sector.

Adele Turton Tom Frank Director at Ice Cubed Property Finance Tom is said to be a key contributor to the finance sector in Yorkshire and the North. In early 2021, he made the decision to refocus on the company’s original mission statement, which is to provide niche services and advice in a part of the market that he felt was underserved. This led Tom to launch a new corporate strategy of ‘financial architecture’. The concept dictates that the broker should understand each element of a project and how it fits together, while interacting and responding to changes in its financial structure. For example, possessing the knowledge of planning, architecture, development and legals to a level that allows the business to enhance and enable other elements of the project and, ultimately, the scheme as a whole. Last year, Tom and Ice Cubed secured over £300m of funding for a small group of clients, including £100m for the redevelopment of an entire street in York into a mixed-use development, including a sustainable aparthotel, grade-A offices, and an international visitor attraction. Tom is proud of the small part he and the company have played in helping York trade and develop its way out of lockdown, such as aiding a range of developers to restructure retail units or repurpose them into hotels, residential or leisure assets. The company’s personal understanding of the York market, and its ability to source funding and investment from within and outside of the city, is said to be a key factor in the city’s success.

Managing director at Blanc Property Finance Adele—who is labelled as “the real deal” and a “voice of reason and wisdom”—cares passionately about her clients and puts them before income.

Defined as “very well connected”, she isn’t scared to work with new lenders. Her knowledge of the legal process is “incredible” and her clients say she understands deals better than most, and acts as a friend and confidant. Her proactive nature and creative approach means that she has been able to surpass expectations on numerous occasions to get complex loans and situations resolved and avoid deals collapsing and suffering from unwanted costs and time spent.

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Kelly Rule Senior specialist adviser at VIBE Specialist Finance Having started in her role just before the pandemic hit, Kelly has developed a great pipeline, secured new business relationships, and continues to build on her name in the industry. She actively promotes educating clients and introducers alike on specialist finance and handles the pressure of an increasingly high level of deals while retaining a consistent level of service.

During the past 12 months, Kelly has had a wide variety of clients—from first-time buyers and landlords to portfolio investors with upwards of 150 properties—and has ensured that each one is treated with care, understanding and enthusiasm. It is said that her extended knowledge and understanding of the industry really allows her to stand her ground and let her voice be heard. Alongside her own very busy workload, Kelly always has a moment to help her colleagues—whether that be a fellow adviser or diving in to case manager responsibilities when required.

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Meir Peer Founder and managing director of Redi Finance Meir is described as a “kind and assertive broker” who always puts a client’s needs first and responds quickly and accurately. He is also “an asset for anyone who has had the opportunity to work alongside him” and is always one step ahead.

He understands the difficulties some of his clients have faced as a result of the pandemic and clearly cares about and will make time for them. One borrower said Meir was a “conscientious, knowledgeable and approachable broker who you can be sure will fight your corner to reach the best possible outcome”, while another said he was their “financial guardian angel” during 2021. Furthermore, Meir is said to be very quick to assess a project and, if he thinks it is feasible, he will make it happen.

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Lucy Barrett Founder and managing director of Vantage Finance Described as influential and talented, one colleague commented that Lucy has been inspiring to work with. Her knowledge of the industry is said to be unparalleled, and she has strategic partnerships with the vast majority of the specialist lending space. After noticing that intermediaries were trying to maximise revenue streams to survive the pandemic, Lucy and her team were able to help with new and complex cases they might not have previously dealt with. Overall, the business completed cases for 93 new introducers and had over 2,000 brokers across the UK utilise the company’s expertise and service.

While she is the managing director of the business, she also has the biggest pipeline; in 2021 alone, Lucy completed over £62m worth of deals.

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Phil Gray Managing director at Watts Commercial Finance As a well-respected stalwart and “ultimate role model” of the commercial finance industry, Phil has continued to evolve his commercial brokerage business while growing year-on-year, culminating in a £5.55m turnover in 2021. Despite difficult market conditions over the past 12 months, the company was able to help 1,126 customers from 1,171 applications across a spectrum of lenders. Alongside this, it maintained a 98% customer satisfaction rate. Phil took the bold decision to expand into new locations during the pandemic, which has bolstered the brokerage’s presence across the country. Moreover, his commitment to his clients is emphasised by his investment of £250,000 in Watts’ IT to provide 24/7 access for them to follow their application from start to finish. The app, which has recently soft-launched, can be used as a standalone method of communication, or as part of a hybrid plan, blending Watts’ traditional service with the latest innovative tech. He is also said to have provided wider support for countless SMEs as a board director for the NACFB, giving a voice to the broker community.

Jason Dempsey New business manager at Developer Money Market

Adam Tauber Development finance specialist at Crystal Specialist Finance Adam is considered a person who always does what is right for the client and fights to get the deal done. He is known to work with the lender as a partner, rather than a competitor, and his speed of service and product knowledge is described as second to none—especially in development finance. Customers say that Adam goes out of his way to come back with updates and provide full support, and has helped fast-track cases when clients have had to make quick decisions. This “affable, charming, conscientious, tireless individual” is passionate about his projects and does everything he possibly can to source the best outcome for them.

Jason’s understanding of deals from all angles and that of lender appetites has made the finance process easy for property developers during the past 12 months. Answering questions and arranging last-minute terms over weekends and Friday evenings is not uncommon for him. He was able to source finance at much higher LTVs (85%) than some other brokers and, when an obstacle presented itself, he ensured an agreement could be reached to save the deal.

Jason can identify what’s actually needed, rather than what’s asked for, and communicates that to all parties in a clear and precise manner.

One person commented that Jason went to tireless lengths to help with research, completing forms, and keeping borrowers on schedule.

He was also instrumental in the company’s system development and implemented a dynamic update feature, matching against development and construction types, developer experience and more—all of which makes loan matching and comparison even more accurate.

Piragash Sivanesan Founder of Totum Finance Piragash is said to truly understand lenders’ criteria and has the ability to explain to clients what is required to make sure the application for a loan is successful. His knowledge of structured loans and the alternative lending market is described as unparalleled. “Piragash constantly puts the client first, continually works overtime [and] challenges lenders to make sure his clients are always getting the best deal possible,” said one person. A new developer client said they were “endlessly impressed” with Piragash’s ability to navigate them through the world of development finance, demystifying many of the complexities, and greatly enhancing their understanding of all aspects of the sector. “He has successfully connected us with lenders that are comfortable with our relatively limited level of experience, where this has tripped other brokers up (often quite late on in the process) and left us hugely frustrated,” they commented.

Piragash has designed a database to compile lender criteria in order to match his clients to multiple options and give them a balanced view of the market. In 2021, his work ethic was always to serve a larger purpose and that has reflected through advancing the careers of employees at Totum.

He is described as a “truly inspiring leader, mentor, business partner, broker and stellar individual”.

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Among its diverse sources of capital, CrowdProperty is backed by major global financial institutions to the tune of over £300,000,000. Coupled with CrowdProperty’s unique and highly valued ‘Property Finance by Property People’ proposition, this further increases our scalability and capacity to fund larger projects.

CrowdProperty continues to provide the speed, ease, certainty, transparency and expertise of finance needed by small and medium sized developers, with a clear strategy to provide £500m+ of lending p.a. by 2025.

Apply in just 5 minutes for an initial decision in 24 hours www.crowdproperty.com/apply

Advertorial

HELPING INVESTORS MAKE THE MOST OF NEW OPPORTUNITIES To find out what’s new at OSB Group, we speak to its head of specialist finance, Emily Hollands (nee Machin). Working with an expert team of specialist finance account managers, Emily oversees the commercial and semi-commercial lending propositions across InterBay, as well as bridging finance with Precise Mortgages

E

mily’s extensive experience and knowledge mean she’s well placed to provide relevant and bespoke solutions for brokers.

She understands the challenges they face, and her team is on hand to help, however complex a case may be.

How is InterBay utilising the experience of its team to benefit commercial brokers and their clients?

We’re looking forward to a strong commercial market in 2022 and, to ensure brokers can make the most of new opportunities, our team is ready to help them meet their clients’ borrowing needs.

We pride ourselves on being known as case solvers—we’re renowned for delivering innovative, bespoke solutions. We’re only able to do that by drawing on the years of knowhow the team brings to the table.

Our specialist finance account managers have bags of experience in all aspects of the business and, wherever you’re based in the country, you’re never far away from the support you need.

I would always encourage brokers to contact us and we make it easy by offering a variety of channels—phone, Live Chat or face-to-face, if you prefer. If you’ve got a question, need assistance in placing a case, or simply want to talk through an application, we’re here to help.

What new products can brokers expect to see from InterBay in 2022 to support borrowers in the semi-commercial and commercial finance markets?

We’ve hit the ground running in 2022 by completely refreshing our semi-commercial and commercial ranges to help investors make the most of new opportunities.

We recently cut rates by up to 50 bps on our two-, three- and five-year fixed-rate products, increased the maximum LTV up to 75%, and significantly expanded the asset classes we’ll consider. We’ve also removed all trail ERCs, reduced the proof of rent to just three months, and have the ability to assess loan sizes over £2m if you refer to the sales team.

Brokers applying for one of our mortgages will benefit from a personalised, streamlined approach, delivered in partnership with our specialist finance account managers and aided by our in-house real estate team, which has many years of experience supporting complex cases.

And that’s just for starters. We’ve got lots of exciting things planned for the coming year, so watch this space!

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In what unique ways can InterBay look at deals that sets it apart from other specialist lenders?

As experts in providing bespoke solutions for brokers and their clients, we pride ourselves on our ability to say ‘yes’ when other lenders may say ‘no’. For example, we’ll accept applications on a wide range of different commercial property types, such as broken blocks and those with shared utilities. We also don’t insist on a specified split between commercial and residential purposes on semi-commercial cases, which many other lenders may insist on.

To give an example of how flexible our criteria can be, let me talk you through a recent case where we helped a first-time landlord with the purchase of a semi-commercial property.

The client came to us looking to borrow £170,000 to convert a £350,000 property (which had previously been a bank) into a restaurant with two residential flats above, in their personal name. The rental split on the property was £18,000 for the commercial element and £15,000 for the flats—so £33,000 in total.

Despite the challenge of converting a historic building, we were able to offer a capital and interest repayment mortgage with the proviso that, as a first-time landlord, the client would have the property professionally managed as they gained rental experience.

Advertorial Emily Hollands

What commercial/semicommercial market trends do you expect to see in 2022?

One of the reasons we launched our new semi-commercial and commercial proposition is because we’re seeing signs that the commercial property market is now well placed to show positive value trends across all sectors.

Although Covid has perhaps accelerated the rate of consumer transition from visiting physical shops to using online platforms, this trend was already being seen—but it’s fair to say that lockdown certainly expedited this.

Other things we are noticing in the market are perceived safe havens such as convenience stores and industrial/ distribution. These are likely to remain the best performers.

Interestingly, office requirements have not ceased, and the volume of lease assignment or sub-letting opportunities being marketed is not as high as expected as businesses adjust to hybrid working arrangements. One trend that has been identified is that occupiers are being drawn to quality as both environmental and staff wellbeing lead tenant requirement lists.

What should landlords be looking out for if they plan to diversify their portfolios to include commercial, and what are the advantages and drawbacks when it comes to yield and securing finance?

The most important thing for clients to look for, and I can’t stress this enough, is a specialist commercial broker who understands the market, has a broad knowledge of the products available and knows the difference between different lenders’ underwriting requirements.

Semi-commercial and commercial applications by their nature can often be a little more complicated than a standard mortgage, so a broker who knows how to place one right first time can mean the difference between it being completed efficiently and there being hold-ups further down the line. Making sure an application is placed correctly means a lender will be able to make an informed decision from day one, helping to meet the client’s expectations and reducing the need to ask for more information.

Why should brokers consider using InterBay in 2022?

During the challenges of the past year, we’ve not stood still but, instead, made changes behind the scenes. For example, we strengthened our underwriting team, streamlined processes, and developed a really robust range of semi-commercial and commercial products that offers brokers a far greater choice of lending options.

As a team, we have a wide range of specialist knowledge and expertise that we can use to help brokers find the solutions they’re seeking.

If you have a case in mind, let us go the extra mile for you and InterBay it. Speak to your local specialist finance account manager today and, if you’re unsure of who to contact, visit interbay.co.uk/sales-team FOR INTERMEDIARIES ONLY

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Now is the time for the SME

After two years of struggling through the pandemic, many of us are asking: is this the beginning of the end for the commercial property market?

According to Ian Workman, the new head of commercial banking at Recognise Bank, not at all—in fact, he sees this as a prime opportunity for SMEs and healthcare businesses to expand. I speak to him about what the future might hold for this sector and how the institution plans to fill the funding gaps with its existing SME offering and upcoming healthcare proposition

Words by

andreea dulgheru

Feature

“It’s probably the first time in my 30 years in banking that I think SMEs have got a real choice”

ne sector that’s suffered the brunt of the pandemic is commercial property. With the health crisis pushing people to work and seek refuge in their homes, the high street is a shadow of its former self, and office occupancy levels are fluctuating every month. In mid-December, they dropped from 20.8% to 10.7%, the lowest figure recorded since June, as stated by Remit Consulting. Yet, as consumer sentiment reverts to a preCovid 19 “normal” (according to a recent PwC report) and improved high-street footfall points to a return to town and city centres, Ian is optimistic that the commercial property market will survive, albeit

with a different face.

Unlike many who fear the pandemic will have severe negative effects on this market, Ian sees it as an opportunity to level the playing field geographically. “I think people’s eyes have been opened to what’s outside London. You could say that anywhere in the UK is now available to grow, because the pandemic has proven that the whole world can be connected—therefore, relying on that gateway to Europe in Dover and the south-east corner is perhaps not as important.” While he believes that London and the South East will remain a strong region, he predicts an increase in activity in other areas, particularly Manchester, Birmingham and Leeds, as more companies— especially in the logistics sector—are moving away from the capital in search of warehouse space to meet the demand for online shopping.

When it comes to subsectors where investors may find opportunities in the

coming years, Ian points to retail, which may surprise some. While he emphasises that this area will be slow to recover, he believes that SMEs have the chance to take advantage of the space left behind by the closure of big stores, such as Debenhams.

He explains that, due to the lack of demand for massive square footage, these department stores are, or will, likely be split into multiple units, which are less appealing to big investors, who are generally interested in purchasing larger sites.

This opens the door for smaller players to set up in popular retail areas that they could never afford before.

On top of this, the shift to hybrid working has led to a rise in consumer demand for local amenities. “I think what’s really interesting to watch is that, as more people are working from home, they’re drifting back into their local communities and shops,” Ian observes.

Commuter towns and villages, in particular, have

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seen a positive performance; a recent PwC report reveals they are faring better than city centres in terms of retail net closures (-3% and -2.3% vs -4.3%). “Now, we have opportunity for every high street to be slightly different, to bring in retailers and SMEs that will offer a different flavour to each—and, if done successfully, it will attract people into town centres again,” Ian says. “There’s an abundance of retail premises.

What we’ve got to do is stimulate demand for those spaces and show investors there’s a real opportunity here.” With more than 800 new independent retailers entering the market in the first half of 2021— according to Local Data Company—it seems some SMEs have started to turn the tide for themselves.

Another area where Ian sees significant growth potential is the healthcare market, which has already shown promise throughout the pandemic. Knight Frank has revealed that healthcare real

Feature

estate investment reached a record £2.7bn in 2020, up 55% on the previous year. While elderly care remains the most liquid subsector from a senior debt perspective, other specialist areas are gaining popularity, including dentistry, for which Recognise Bank’s research has shown an increase in interest.

“I think that, thanks to social media, people are much more conscious about their appearance. You hear a lot more about teeth whitening and Invisalign braces, not just routine check-ups—so I think this area’s going to boom,” says Ian. He adds that as the demand for healthcare services increases, it may push the requirement for additional space for surgeries, which could be met by reusing empty retail units, in addition to new builds.

While there may be windows of opportunity for SMEs in the commercial property market, that’s not to say they don’t face challenges as well. The uncertainty of how long the pandemic will last, together with the announced increases in minimum wage and National Insurance contributions, will weigh heavily on SMEs’ shoulders and could threaten their bounce-back, Ian comments.

He stresses it’s essential for the government to help smaller businesses take advantage of the prospects in the market and thrive in these adverse situations.

“All the government loan schemes have been really valuable in keeping those SMEs going during the pandemic, but the support should not stop there; it needs to exist post-pandemic too,” he states, adding that a review of business rates in the near future would also be beneficial.

But it’s not just the government’s responsibility to assist SMEs—lenders also have a part to play in fulfilling their financial needs. This is what Recognise Bank is planning to do. In addition to its commercial property finance range—which offers loans from £100,000–£5m at up to 75% LTV (up to £2.5m) and 70% LTV (over £2.5m)— the relationship-based lender provides professional practice loans, and is working on a new product targeted at the healthcare sector. This proposition aims to provide finance to professional businesses such as pharmacies, dentists, opticians, doctors’ practices and cosmetic surgeries, which can be used for various purposes, from funding equipment to office refurbishment and acquisitions.

“It’s probably the first time in my 30 years in banking that I think SMEs have got a real choice,” Ian remarks.

“No longer do they have to just rely on the big banks; they have options of where to go for their lending, and they can do that directly or use a broker. You’ve got successful businesses, brokers and new lenders like Recognise working together to really support the SME economy, and that’s where you’ll get the growth.”

He goes on to say that people underestimate the importance of small enterprises. “I sometimes think that multinational corporates get much more voice, but that’s going to change. I think now’s the time for SMEs.” 79

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Diversity & Inclusion Series: Words by

caron schreuder

The harsh reality In October last year, the Association of Mortgage Intermediaries (AMI) published a groundbreaking report on diversity, inclusion and equity (DI&E) in the mortgage market. Its findings— compiled from survey responses of 1,178 AMI members, plus anonymous comments from 10 longer interviews—laid bare a reflection of the variety of lived experiences in the sector

A

lthough AMI’s members are primarily in the realm of mortgage advice, the publication’s contents reached the far corners of the finance industry and sparked debate in our specialist niches, too. Nowadays, there is a tendency to slap ourselves on the back when considering ‘how far the industry has come’ and its growing professionalism, but parts of the report make for, in its own words, uncomfortable reading.

I’m pleased to be highlighting the results at the start of a new year when our will to embrace change is at its freshest, and I have also enlisted thoughts from some in our immediate sector as to how they’re taking this information forward in a meaningful way.

For the purposes of the paper, a ‘Type 1’ profile was established to represent straight, white, able-bodied men (expected to experience no direct discrimination).

Alongside this, the perceptions of women, ethnic minorities, LGBTQ+ identifiers and those with disabilities were shown.

This exposes just how disparate views can be, depending on the group.

It is worth noting that 90% of the respondents are white; 22% are aged 35 and under; 34% identified as having a disability or impairment; 93% categorise themselves as straight/heterosexual; and the ratio of female to male is 41:58, with a very small number (five) identifying as trans. Despite some intersectionality between these groups, the report’s findings often come with a caution relating to the small samples represented. The ethnic minority group, including those with mixed heritage, for example, is made up of just 105 people.

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“THE THING THAT SHOCKED ME THE MOST WASN’T THE LACK OF REPRESENTATION, BUT THE LACK OF AWARENESS FROM TYPE 1 ABOUT HOW OTHERS IN THE INDUSTRY FEEL ABOUT THEIR PROGRESSION, SALARIES AND DIVERSITY”

I spoke to AMI chief executive Robert Sinclair (who has presented the findings to the FCA) about what the association feels its responsibilities are in encouraging a wider variety of members, thus also improving the future sample iterations of the study.

The report points out that AMI’s board itself is far from representative. Robert explains that a dearth of diversity in the market, especially at senior level, means that very few get nominated to the board in the first place. “I have been asked, ‘How can you start this journey?’ and the answer is that, because we aren’t diverse enough, we have to start it,” he comments. AMI is considering launching a library of material that gives insight into mortgage jobs and the various 84 Bridging & Commercial

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ways of entering the space, with the aim of appealing to a wider range of people.

painful for those groups to see the agenda being viewed in such a limited sense.

and are based on discretionary power rather than a fair and transparent process”.

The ignorance (whether wilful or not) evidenced by Type 1 when it comes to their colleagues’ different experiences is what stood out to me. Although 74% of Type 1 respondents feel it is important to improve DI&E in the sector, they rank lowest of the groups in their desire to see change. Given the much-needed noise being made around inclusion in many facets of modern life, it’s telling that up to a quarter of this demographic don’t see it as warranting serious attention.

In addition to a lack of accountability (only 39% believe that decision-makers are held responsible for improving D&I), leadership roles remain less attainable for those of the non-Type 1 variety. If this were to be remedied, leaders from varying groups could spot and validate microaggressions faster and enact change quicker, not to mention bring about diversity of thought, which all businesses benefit from when they boost representation.

A combined 66% of people with children and/or other caring obligations do not think that everyone in the mortgage industry has the same opportunity to progress and is rewarded fairly, regardless of their family status. Of those who had taken parental leave, 48% of women felt that this had put them at a disadvantage, compared to 8% of men.

A similar number consider opportunities in the mortgage market to be available on a fair basis, regardless of gender and/or sexual orientation. This might just be me, but I don’t think you have to be discriminated against yourself to know that this simply isn’t true.

Haley McPherson, group marketing director at Enra Specialist Finance, was also struck by this pattern. “The thing that shocked me the most wasn’t the lack of representation, but the lack of awareness from Type 1 about how others in the industry feel about their progression, salaries and diversity,” she says.

To quote one of the interviewee’s highlighted comments, “It is morally incumbent on all of us to stop this, to educate ourselves and each other, and to be aware.”

This moral impetus speaks directly to businesses whose primary concern is the bottom line. Data shows that companies that embrace diversity outperform their competitors by up to 33%, leading the way in terms of innovation and being more attractive to job seekers, with most women and almost half of men now researching a firm’s D&I policies prior to accepting an offer.

The Women in Finance Charter comes up as an example of an initiative that has made notable strides in improving representation in the sector. However, some survey participants feel this particular aspect of DI&E has overshadowed other groups—as shown by the 44% LGBTQ+ and 50% of people from minority ethnic backgrounds who disagree that the sector is genuinely committed to DI&E, compared to 26% of women who claim this. Feedback included being disillusioned with leaders who profess to be diversity champions but have addressed only gender inequality. It must be

“To provide a board and a higher management structure that is inclusive, you have to actively look for inclusion and recruit on that basis,” said another interviewee.

Echoing Robert’s comment about AMI’s plans to provide guidance to possible career seekers, the report goes on to say: “Barriers to entry into the mortgage industry are lower than in many other domains. Many people say they just ‘fell into it’. This presents a unique opportunity for the sector to be more deliberate about widening its recruitment to increase workforce diversity and to engage in outreach at a time when many young people, especially women and people of colour, are often educated to a higher level than their male white British peers.”

More than half of women (54%), LGBTQ+ (56%) and ethnic minority (52%) respondents believe that people like them are not well represented at all levels of the mortgage industry.

Comments from those interviewed refer to men being “pulled through the ranks quicker” and the “grooming” of peers into higher positions by incumbents.

“It’s toxic and full of unconscious bias,” states Kim McGinley, director at VIBE Finance, who feels passionately about using her voice as a female business leader.

The report suggests that assumptions are still being made about people’s familial intentions and commitments, creating further hurdles for women (at all stages of their careers) and those with caring responsibilities. A person’s willingness to socialise after hours, drink alcohol, or partake in a round of golf all influence their possible progression.

Furthermore, “promotions and access to more lucrative business opportunities seem to be afforded to people who ‘fit the mould’

Elsewhere, pay discrepancies were illuminated. Despite the fact that mortgage advisers’ income and rewards are often based on commissions, thus seemingly creating a level playing field, a familiar pattern emerged: straight white men consistently earn more than their colleagues, and income inequalities increase with seniority.

30% of people from ethnic minority backgrounds do not believe that they are fairly paid and rewarded compared to colleagues of similar experience, and 31% of women feel the same.

Those figures are staggering.

The highest bracket in which men and women match one another in terms of annual income stops at £49,999; in all others, women make up a notably smaller percentage. The ethnic minority backgrounds group peaks at £69,999, then sharply declines.

While respondents say the culture of the industry has improved in recent years, it has a way to go before it adequately reflects society. Sadly, it is still consistently described as an ‘old boys’ network’.

This is never more evident than in the data that relates to belonging. Only 50% of LGBTQ+ respondents feel that they belong in the mortgage industry. Given that 45% of those who reported a mental health condition are in this same group, more work has to be done in the way of support.

Some 19% of those from an ethnic minority background disagreed with the statement ‘I am valued at work’. “Too many people feel like they can’t be themselves,” Robert shares, adding that there is a disheartening trend of those who choose to set up on their own because of bias at work, and tend to keep their firm small in order to protect their environment.

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A section of the report focuses on industry events and awards. What should be an opportunity to showcase and promote DI&E typically devolves into an atmosphere dominated by older white men, from the selection of speakers and the format and timing, to the flow of alcohol, and the conversation around the table. Pulled quotes from interviewees in this area are scathing.

Kim, who has generated a huge amount of engagement around her social media posts on this topic, describes the events roundabout that took place in Q4 2021 as “eye-opening”. “To be at a point where I am contemplating not allowing some of my team members to attend as I feel I cannot be there all the time to support and shield them from unwarranted behaviour is worrying to say the least,” she imparts. “There is a very clear concept of ‘business above behaviours’ when it comes to events—those that write enough business are excused of certain behaviours and are allowed back time and time again, and this should not be the case…

But who polices this? Who does someone complain to? The event organisers, or the company the individual works for?”

I, too, struggle with where this accountability lies. In November, a note was circulated among organisers, me included, encouraging us to set out the parameters for good behaviour and remind guests how to conduct themselves at our events (Robert tells me that for the functions he’s been to since October, this is happening more and more).

I don’t mind revealing that my initial reaction wasn’t too neighbourly. Why should we have to monitor the actions of professionals? If we cannot rely on self-

control, surely it is the table holders next in line to be in charge of their guests and employees? (I have since come round and appreciate that it can’t hurt to draw attention to the issues we are facing in this way. That said, it still irks me, especially as a woman, that I should have to remind grown men to keep it together in a work environment.)

Some 14% of all survey respondents have witnessed or experienced situations where people felt uncomfortable at industry events—with a much greater proportion of women and people from underrepresented groups reporting unease.

The main reason cited for underreporting (an average of just 18% who had seen or been subjected to inappropriate behaviour went to HR or a senior) is lack of trust that complaints will be handled adequately and lead to a positive outcome.

Comments also hint at HR hires needing to be better qualified in working with people from all backgrounds and groups.

More specifically, people fear being victimised. “While the Equality Act is clear on the legal duty to protect complainants from victimisation, adequate safeguards do not seem to be uniformly in place,” the report continues.

When asked whether they had ever considered leaving a role, company or the industry as a whole owing to concerns related to discrimination, diversity, inclusion or equality, an average of 29% said ‘sometimes’, including 18% that fall into Type 1. So, it isn’t going completely unnoticed by our ‘baseline’ group, it seems.

27% of those from an ethnic minority background think about leaving ‘often’,

“WHILE THE EQUALITY ACT IS CLEAR ON THE LEGAL DUTY TO PROTECT COMPLAINANTS FROM VICTIMISATION, ADEQUATE SAFEGUARDS DO NOT SEEM TO BE UNIFORMLY IN PLACE”

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and herein lies an urgent call to action. If those who are already in the sector think about getting out of Dodge almost onethird of the time, it’s no wonder we don’t attract more people from those groups.

PLANS FOR CHANGE As the report states: the vast majority show a desire for change, but that aspiration must be backed by immediate action and structural reform.

While only 38% of respondents, across all groups, feel like D&I is being taken seriously in our sector, I ask Haley about the future. “As a female in a leadership position and a member of the LGBTQ+ society, I can look at this in many ways.

From the outside, the sector has a lot of work to do; however, I see some positives within my business that give me hope for the wider industry. We are making small steps, but it requires a joined-up approach.”

“Enra and all of its brands are committed to our ESG plan and policy which, for the past 12–18 months, we’ve been developing and driving through the veins of our business,” Haley tells me. “I am ensuring this is not just a tick-box exercise; we are actively driving change.” By the time this is published, the company will have launched its inaugural ESG forum which has specific deliverables and accountability measures attached to it, and a graduate scheme is underway which Haley reports is already bringing in a diverse array of talent.

Jonathan Sealey, CEO at Hope Capital, believes that inclusivity is “undoubtedly” climbing higher among business leaders’ priorities. “That said, I think there are still elements of a ‘glass ceiling’ that need to be addressed and overcome.” He confirms that the lender is doing its bit to remove obstacles to equal opportunity by providing support to every individual in the firm. “We strongly believe inclusivity and equality is not only something we should preserve, but continuously strive to support and progress.”

Hope Capital, which signed up to the Women in Finance Charter in 2018, met its target to achieve 50% representation of women at senior management level

by November 2020. It is committed to making what is “a traditionally male-dominated industry not only a welcoming space for women, but also one where everyone is provided with the same opportunities to thrive”.

Together welcomed AMI’s report, and a spokesperson shared the business’s ambitions in relation to DI&E. “We are committed to increasing the representation of women and of black, Asian and minority ethnic colleagues in senior management positions to better reflect our workforce, customer population and the community we work in. To support this, we have signed the Women in Finance Charter and established a Diversity and Inclusion Advisory Committee, which provides views and

advice to our board and executives on these issues on behalf of all of our colleagues.”

Juliet Baboolal, partner at legal firm Seddons, outlines that its company culture embraces uniqueness, and that training should cover the importance of diversity in the workplace. “We encourage discussion groups among staff so they can gain sufficient knowledge on such issues.

We believe that cultivating curiosity in a safe environment is a big step in getting the company to function better.”

AMI’s steering committee behind the study is continuing to work on taking DI&E forward, alongside the addition of two working groups (volunteers for these are currently being sought and places are not exclusively available to members) that will focus on the association and its impact, and the broader market, respectively. The Intermediary Mortgage Lenders Association has confirmed its support for this next phase.

Robert anticipates that the next report of this kind will be pencilled in for the end of 2023/ early 2024, to allow enough time to evidence change. But how will progress be measured? “Success for me will be, the next time we do this, more people will want to be involved and give us a better narrative about what we can do better and not all that is wrong.”

Backstory

‘I hope to be the driving force behind a tech evolution in this wonderful industry’

Knowledge Bank’s new non-executive chairman, Ying Tan, discusses his decision to invest in the criteria search platform, what the specialist finance market is currently lacking and how he would like to see the industry progress There are very few people in the specialist finance market who haven’t heard of Ying Tan. With over 25 years of professional experience—more than half of which he spent founding and leading Dynamo—and having successfully published a book, there’s no denying he is an industry powerhouse. Now, he’s using his extensive expertise to take Knowledge Bank to the next level to ultimately help the specialist finance sector thrive.

Why did you decide to invest in Knowledge Bank?

I received a lot of offers after my exit from Dynamo, but the one from Knowledge Bank stood out; what caught my attention was that it was a proven entity which has won numerous awards. Also, there’s a lot of opportunity to add massive value and significantly enhance the company, as it is very scalable and can do even more to assist the broker journey.

How do you view Knowledge Bank’s place within the specialist finance arena?

In this sector, most decisions are driven by criteria, not rate. Knowledge Bank is crucial for this area, as I know from my previous role that criteria drives placement.

Now that you’ve made a significant investment, what will the business be focusing on?

The next steps are raising additional funds, increasing the size of the team and enhancing the tech—as well as launching a suite of tools for both lenders and brokers.

Following your departure from Dynamo, what are your plans for yourself?

In addition to spending more time with my family, I’m open to more board advisory roles and angel investing. I’m also interested in investing in property development projects and always willing to consider new digital start-ups—if the opportunity is right.

What are the top three things the specialist finance market is in need of?

Speed: many of the specialist lenders are held back with heavy-touch underwriting, which slows down the application-to-offer process.

Technology: the industry needs to embrace tech and look at ways of reducing its labour-intensive processes, which will improve the overall time in obtaining an offer.

Documentation: this business is so reliant on reams of paperwork; companies need to look at utilising tech, which is already out there, to reduce this.

How would you like to see the sector evolve?

I’d like to see brokers’ knowledge of specialist lending continue to improve, as well as more competition in the market, which should result in better services for brokers and borrowers.

And, again, the adoption of more technology.

Those that succeed will be those who embrace tech—particularly in complex cases—to speed up the overall process.

What role would you like to play in the future of the specialist finance space?

As someone who is respected and heavily invested in this sector, I hope to be the driving force behind a tech evolution in this wonderful industry.

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How did you spend your very first pay cheque?

I actually sent it to my grandma. She lived in a rural village in Malaysia and was going through cancer treatment at the time. Sadly, she passed away shortly after, but she used the money to buy medicine and some treats.

Most memorable moment from your time in the industry?

It’s not a moment as such, but what jumps out to me is the pride that comes from taking people from outside the industry and helping them to thrive.

I’ve brought people into the sector from flipping burgers and they’ve gone on to reach senior roles.

Your dream job—if you weren’t doing this, what would you be doing?

Strictly speaking, my current role isn’t a job, so I’m essentially living my dream.

I’m incredibly passionate about being an entrepreneur—I love advising businesses and helping them to succeed. When I was growing up, my goal was to play football for Liverpool. Sadly, I don’t think that’s coming true any time soon!