Brokers are unhappy—but why?

Broker satisfaction with lenders has fallen to its lowest level outside the pandemic, a recent study by Smart Money People has revealed. To uncover the reasons behind this, specialist finance intermediaries share the biggest issues they are experiencing with finance providers and how these could be mitigated

Narinder Gill Associate at Coreco Commercial Finance

The volatility and difficulties in maintaining consistent pricing are understandable, but providing an acceptable level of service and adhering to publicised agreements is paramount for all. Instability of swap rates have most definitely contributed towards this; I also think pulling products at short notice can cause a flood of applications, with the quality of submissions naturally declining when brokers submit cases without having clarified the finer details of lending policy beforehand. Lender portals are under huge pressure and being tested to their fullest capacity. I would like to see improvements in the ability to attach/package cases from the outset, with features such as drag and drop and the option to add notes and attachments to submissions. Having direct access to underwriters has never been so important in order to discuss cases quickly and understand any issues for both lender and broker.

Imogen Sporle Managing director at Finanze

Over the past 12 months, my biggest irk with lenders was how little notice they have given when pulling their rates—even more so when they withdrew rates for cases that were being underwritten and where the client had already paid an application fee. Of course, there were also huge issues with service levels, which were frustrating for us and the clients, but also for sellers, as these have been causing long delays. In some cases, clients have lost out on properties because sellers were getting (understandably) impatient. The whole miniBudget fiasco and the increasing base rates caused these problems, and I understand that this forced lenders to pull products and increase pricing— however, even 48-72 hours’ notice would have been enough to please brokers. This is why I think that finance providers should put a rule in place to make sure that, regardless of the circumstance, if they are removing products, an email should go out at least 48 hours in advance to all brokers to make them aware of the change.

In my experience, certain lenders have a communication gap between their deal origination and underwriting teams—the former tends to be proactive in pushing deals forward, while underwriters focus on processing and assessing the risk of the deal. Unfortunately, at some lenders, the handover from the origination team to underwriting can result in the process slowing down, which can negatively impact the transaction. Personally, my main concern is the speed of the process. A bridging loan is typically expected to be fast, but some lenders’ underwriting speeds are more in line with those of traditional mortgage lenders and delays can, ultimately, cause deals to fall through. It is important to ensure that originators and underwriters work collaboratively rather than consecutively. Although underwriters should be incentivised on completion rates to avoid bad debt, it may also be beneficial to consider incentives based on the speed of the process.

James McGregor Director at Mesa Financial

I think the biggest issue we have seen is lenders agreeing DIPs and then declining later on in the transaction. When lenders have all of the information upfront and, once a DIP is approved, there should be no concerns other than the valuation report. The reason for this issue is a mix of trying to deliver on unrealistic lending targets and poor processes. In my opinion, deals should be underwritten upfront and then agreed subject to valuation; with all documents signed off ahead of time, the case can be ready to go to legals once the report has been confirmed. Honesty from the outset around timescales and setting realistic expectations are also important; every adviser would tell you they prefer a fast “no” to a lengthy decision process. It would also be beneficial to have one or two points of contact for a deal. We often have too many situations in which multiple underwriters and case managers are involved, which means the same information is requested regularly—so having one point of contact would solve a lot of problems.

Michael Craig Sales director at Brilliant Solutions

Lenders have been pulling rates and products too quickly with minimal notice, which has created a huge amount of unreasonable pressure on brokers and, of course, clients. This has happened across the market, so the impact is significant. We’ve also seen inconsistencies between call centres, underwriters and BDMs, and even between lenders’ case handlers. While this is not a sector-wide problem, there are many finance providers that still suffer with this, and it is incredibly frustrating as mixed messages always make brokers look bad in front of clients. To fix these problems, lenders must address the funding of fixedrate mortgages to enable more realistic deadlines— this can be done through regulatory enforcement, greater contingencies to enable smoother repricing, or a means of hedging the risk earlier on what would be only a small fraction of that fixed-rate loan book. On top of this, lenders must continue to invest in people to address service issues and train them to higher standards—specialist finance needs great people.

The client, broker and lender all want the deal done yesterday, and everyone else involved in the transaction will moan about speed too. Everything can always be done quicker, and we have found that service at some of the lenders is getting slower—quite often, the reasons provided relate to capacity and the size of the team. However, with the industry being buoyant and resilient, I have seen recent positives. For example, lender portals are improving—the better ones restrict duplication of data entry and allow for smoother communication between broker and underwriter. I particularly see their value in streamlining regulated transactions, where nine times out of 10 there is a black-and-white decision. However, I don’t think we can get away from the fact that an investment deal will always need a human touch and consideration. Proactive relationship managers and BDMs are invaluable, as they will often provide the much-needed link between broker and underwriter.

In essence, we are all in the same boat and I think for some time we have undervalued the skill and expertise required to be a proficient lender and/ or broker. It feels a little unfair to deride lenders as the sole reason for poor service when, collectively, we have faced economic headwinds, a pandemic, and staff shortages. It takes over a year to competently train someone in our field, so responding to stop-start client behaviours is a challenge for any business or business owner. Lenders should communicate more transparently on the problems they face and, equally, set minimum broker standards for packaging to enforce a standardised, quality-focused approach; poor packaging from other intermediaries slows everyone down and is unfair on those committed to quality. Moving forward, I believe we all should take a measured and consistent approach to our environment—let’s just remember to survive with quality central to our values. We have many economic challenges to face, and each one of us surviving is a positive reflection on our market.