This year marks the fourth anniversary since TSB split from Lloyds Banking Group. Yet distinct footprints of the latter remain etched into the challenger bank’s operations.
The bank is still in the process of migrating from Lloyd’s systems onto its new owner Banco Sabadell’s technology system. The Spanish bank has solid form in integrating new businesses into its existing IT platforms having amalgamated 15 other businesses, according to Roland McCormack, TSB’s mortgage distribution director.
He said: “It really is a game changer for us and it completes the story about being a meaningful challenger bank that has its own technology.
“To create TSB was a massive undertaking – especially on the IT side because it involved the separation of data, which is a complicated thing.”
He added: “When we split [we were given sole control of] our products, our credit, our processes. A lot of them would have been based on what we inherited from Lloyds, but we also changed a lot as well.”
TSB muscled into the congested mainstream mortgage marketplace in September 2013, adopting the direct-to-consumer model. It raises capital for loans through deposits and, to a much lesser extent, securitisation – in which home loans are bundled together and used to back bonds.
Its proposition for intermediaries came in January 2015, following a successful trial period.
This came in the wake of the introduction of onerous affordability rules via the Mortgage Market Review – putting pressure on lenders' mortgage business by requiring them to train their staff to give advice in branches.
Now, more than two years since the launch, it would appear the lender’s entry into the mortgage intermediary market has paid dividends. About 75 per cent of the firm’s mortgage business is introduced by intermediaries, Mr McCormack said.
Some 32,000 new customers were brought in by brokers last year – a 78 per cent hike on the figure for 2015. What is more, £5.1bn of mortgage loan completions advanced through this channel in 2016 alone.
It is therefore unsurprising that the bank is set to pander to the hand that feeds it with plans to start paying brokers procuration payments on retention business.
Vast swathes of the broker community have called on lenders to offer these payments as remuneration for the tougher affordability checks and compliance paperwork in the post-MMR environment.
The new initiative will tie in with a product transfer proposition that is due to be launched later this year.
Mr McCormack said: “We will be announcing in the summer what our procuration fees are going to be. What I can say is there seems to be two approaches that have emerged in the market. The first is lenders paying the minimum they can get away.
“Secondly, there are lenders that recognise there is still an advice process that brokers take their customer through and that costs money. Therefore, any procuration fee should meet that cost. I can’t say what we are going to pay, but I can say that we are in camp two.”
