The balance of power
Peter Izard was head of mortgages at Saffron For Intermediaries
The dominance of the big banks has been underlined again recently, as opposition leader Ed Miliband called for the banks to be forced to sell off branches in order to create more competition.
Whether selling branches is the answer or not, there is no doubt that the big banks continue to account for the lion’s share of the UK mortgage market. Lloyds, Santander, Nationwide, Barclays, RBS and HSBC account for more than three-quarters of all lending and there are no signs of their grip easing any time soon.
In a year in which the mortgage market is expected to continue to grow, this has to be a concern for brokers. There may be talk that brokers will increase their share of the mortgage market and therefore have greater influence, but there is precious little evidence of the balance of power starting to shift.
Let’s be under no illusion: the big banks call the shots and always have done. They dictate products, pricing, procuration fees, the basis on which they will do business with brokers and even dictate which brokers they are willing to do business with. This is no partnership; it’s a dictatorship.
What can brokers do about it? Not a lot. Play the game, keep your noses clean, dance to their tune and keep on banking the cheques for as long as they continue to drop on your doormat.
It does underline the need for greater competition. I’m not going to get all political, but perhaps there is a case for injecting more diversity into the market.
However, brokers can play their part in helping that process along and they can do so now. The big six may dominate, but they’re not the only show in town. There are more than a hundred lenders in the UK. Many may be small and specialist, but they nonetheless have an important role to play. They provide genuine choice and often offer a more personal service based on human underwriting, rather than impersonal credit scoring.
If brokers really want to free themselves from the shackles of the big six, then they do have the power to exert some influence.