Limelight 51

LIMELIGHT A Tenet Group Publication for Appointed Representatives of TenetLime

Issue 51 n




Marketing Toolkit: Give your business a New Year boost Market Watch: Changes to the underwriting process for ‘Portfolio Landlords’ Tenet Events: Dates for your 2018 diary!

PLUS: A big congratulations to three of our member firms...


Editor’s Foreword Grace Godson TenetLime Marketing Consultant


TenetLime Support 04 Industry News The busy regulatory landscape 06 Give your business a New Year boost


Details of the marketing toolkit support available

Hello and welcome to Limelight: In this issue our Industry News article looks at a variety of developments and topical subjects that have taken place in September, including the second phase of PRA standards in relation to Portfolio Lending and the FCA’s Occasional Paper on the ageing population. It also looks forward to developments that are on the horizon, which certainly mean changes for the industry. Find out more on pages 4 and 5 . Think your business brand needs a fresh lick of paint? Does your website need ‘re-vamping’? Our ‘Marketing Toolkit’ brings you a whole range of support such as leaflets, brochures, posters and adverts across a wide range of themes, all of which is designed to give a professional look to your brand and promote your business. Most of the support is available free of charge, but we also work with external suppliers who specialise in providing services to advisers on support such as websites and newsletters. And what’s even better, all our materials are pre-approved by Compliance – so in the majority of cases you can use the items straight away! Get to grips with all the support available on pages 6 & 7 . In this issue’s ‘Market Watch’ Sam and Gav in our TenetLime team have focussed their attention on the new changes in the ‘buy-to-let’ sector, specifically the underwriting process when it comes to ‘Portfolio Landlords’. Whilst you may rarely see these types of cases, it is important for you to understand these changes. Even more so now, as it will be unlikely that a portfolio landlord will be in a position to apply for a mortgage without using a broker, meaning you might see these types of customers more frequently. You can review the full article on pages 22 & 23 . Need to top up your CPD? Our webinars are a perfect opportunity to update your knowledge on key issues, whilst earning that all important CPD. All our webinars are available to watch ‘on-demand’, so you can watch at a time that suits you. Check out full details on page 10 . Dates for your 2018 diary! With the last round of events having just taken place and the New Year fast approaching, it’s an ideal time to get the next round in your diary. Our first round of Non-Investment Roadshows starts on 17th April, visiting 9 locations around the UK. The Tenet Events Team will be getting in touch with you at the end of this year, giving you the opportunity to book all your chosen events for 2018 as a ‘one-stop-shop’. Full details on page 11 . And finally, it’s been another turbulent year in the industry as the financial landscape is continually evolving and the future will have challenges, but equally there is a world of opportunities for you to embrace. At our Adviser Forum (Thursday 7th December) we will be reviewing what is on the horizon, providing you with useful insight and sales tips, as well as the opportunity to network with other advisers, Tenet staff and our provider partners. And whatever may be around the corner in 2018 and beyond, withTenet at your side, you will feel reassured that you have a partner to help you successfully ‘Navigate the Future’ . If you are joining us at the Adviser Forum, we look forward to seeing you there to celebrate the end to another successful year. In the meantime, as the festive period is fast approaching, we wish you a very Merry Christmas and a Happy New Year from all of us here at Tenet. Happy reading!

11 Tenet Events

Dates for your 2018 diary…

23 Market Watch Changes to the

underwriting process for ‘Portfolio Landlords’


Provider Support: 20 AIG Life Get a head start with Life Start and CIC Start 28 Royal London Have we got our protection priorities all wrong? 33 Norton Broker Services Second charges – cheaper than remortgaging? 37 VitalityLife Even small budgets can benefit from big rewards… Tenet Community: 38 Award Ceremonies & Recognition A big congratulations to three of our member firms…



Editor: Grace Godson

LIMELIGHT is a Tenet Group publication 5 Lister Hill, Horsforth, Leeds LS18 5AZ. Tel 0113 239 0011 Fax 0113 239 5322

Terms and Conditions. Although every effort has been made to ensure the accuracy of the information contained in this publication, The Tenet Group cannot accept responsibility for any errors it may contain. The Tenet Group cannot be held responsible for the loss or damage of any material, solicited or unsolicited. No reproduction of any part of this publication, in any form or by any means, without prior written consent from The Tenet Group. The views expressed in this publication do not necessarily reflect those of the advertisers or the publishers.


Industry News A Spotlight on The Busy Regulatory Landscape

Lenders need to make sure borrowers are not over-exposed and now need to take the value of the whole portfolio into consideration when looking to lend on any new or existing property. Lenders must also look at existing borrowing across the portfolio, as well as a much more detailed assessment of the borrower’s personal finances, meaning that in some circumstances you may be asked to supply business plans and cash flow forecasts from your clients. Some lenders may also apply a higher Interest Cover Ratio (ICR) for Portfolio Lending. Whilst lenders will have similar requirements, their criteria will differ, so you need to ensure that you are fully conversant with each one. To assist with this, we have updated our Mortgage Research Matrix on the extranet to cover the new requirements and we would also suggest that you check with the lenders directly and engage with their Business Development Managers, who will be able to advise you on their specific requirements. So, whilst this will require new documentation from lenders and will raise some challenges for brokers in terms of differing criteria, it also offers opportunities for firms to consider annual charging for any larger portfolio clients. Also in September was the FCA’s publication of an Occasional Paper on the ageing population and financial services, which explored the treatment of older people within the industry phase of these changes came into play and new standards for Portfolio Lending now apply, with any borrower with four or more properties subject to new underwriting criteria. New PRA standards came into force in January of this year, with new underwriting standards affecting stress testing and affordability. With effect from 30 th September 2017 however, the second

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and the ability to fulfil their needs. It concluded that there is scope for financial services firms to do more and is urging the industry to look at product and service design, customer support and engagement to essentially make their customer journey more joined up and ensure older people have access to a full range of products, with signposting to all relevant advice areas across the investment and non-investment markets. Don’t forget that we have a dedicated referrals service across a range of advice areas, including equity release, secured loans and will writing. Details on our referral partners including the service they offer, how to register and what enhanced referral fee you would receive are available on the extranet within the ‘Products and Providers’ area. Consequently, following work on the Occasional Paper, retirement interest-only mortgages could be making a comeback, following their redefinition as ‘lifetime mortgages’ after the implementation of the Mortgage Credit Directive. This means that mortgage advisers without an equity release licence will be able to recommend these products. This proposal is due to the FCA identifying a “regulatory barrier to a form of mortgage lending that could meet the needs of some older borrowers”, essentially those who have existing interest-only mortgages and no means of repaying the capital and so are currently faced with selling up and buying a smaller property or applying for specialist equity release loans. It should be noted that this only applies to mortgages for older clients (typically 55+) where the client is committed to paying interest payments from the outset and throughout the term until certain ‘life events’ occur triggering repayment of the debt through sale of the property. Any mortgage that offers an ‘interest roll up’ facility will still fall under the definition of a lifetime mortgage and require the appropriate equity release qualification to advise on and arrange. This proposed change will also lead to additional detail being required in a firm’s initial disclosure document in respect of it’s mortgage services. The regulator is currently canvassing views via a quarterly consultation on this issue, so it will

be interesting to see what the findings will be. We will update you accordingly once the FCA policy statement in this area is confirmed. Looking a bit further ahead, General Data Protection Regulation (GDPR) will take effect in the UK on 25th May 2018, replacing the current Data Protection Act (DPA). Whilst the basic principles of the existing regime will be retained, the GDPR will introduce new concepts and new rights for the data subjects, some of which will have a significant impact on how you handle and use personal data. The biggest change is the increased fines for data breaches. Currently, under DPA the Information Commissioner’s Office (ICO) fines have been limited to £500k, but GDPR increases this to the higher of 4% of the annual turnover or EUR 20,000,000. Currently the FCA and ICO have worked together in relation to a data breach involving a regulated firm, with the FCA imposing greater sanctions. However, in the GDPR world, data controllers will need to be prepared for the ICO taking stricter enforcement action independently of the FCA to utilise the increased fines, creating an additional financial risk in addition to the existing legal and reputational risk.

To support you, we have highlighted 11 GDPR requirements and recommendations and have started to issue a series of communications focusing on each of these requirements and to provide guidance, recommendations and links to other useful resources, to ensure you have the appropriate measures in place in good time. The first GDPR requirement we focused on in October relates to the relationship between data controllers and third party data processors i.e: between you and third parties who process personal data on your behalf. We have also created a new GDPR page within the Information Security and Data Protection section of the ‘Compliance Support’ section of the Tenet extranet, to help you easily find everything you need. Finally, as you’ll be aware, last year the FCA’s Mortgages Market Study outlined how it planned to examine competition in the market to ensure it works to the benefit of consumers. The publication of the interim report is imminent as we write, having been scheduled for summer this year, and we’ll be keeping a close eye as it will certainly mean changes for the industry, which could range from market- wide remedies such as new rules or a referral to the Competition and Markets Authority, to measures aimed at individual companies.

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Give your business A NEW YEAR BOOST The New Year will soon be here. If, like many business owners, you use that time of year to have a fresh new start and give your business a boost, our marketing service could be perfect starting point. That’s because there is a wide range of compliant options for you to choose from, all of which is quick and easy to use…and it needn’t cost you a penny!

If you need any help, call 0113 239 0011 and ask to speak to the Marketing Team or email

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What does our Marketing service include?

Special offer on websites until the end of December 2017 As a special offer for a limited period, there is no set up fee on websites meaning you could SAVE UP TO £175 So, if you’ve been thinking of reviewing your current website supplier, or you don’t currently have a website, now could be the perfect time. Websites cost from just £30+VAT per month. For more details, visit

There is a lot of support to choose from, including leaflets, brochures, posters and adverts across a wide range of mortgage and protection themes, all of which is designed to give you a professional look to your brand and promote your business. A key benefit is that we streamline compliance processes by pre-approving most of the marketing support that’s available to make it quick and easy for you to use. We’ll even add your logo and contact details for you. Most of the support is available without charge (you just cover the cost of printing the materials or the cost of placing an advert as relevant), but we do also have a website and newsletter service which is provided by external suppliers which do carry a cost, albeit at a discounted rate.

How to utilise the support You can see all the existing support by visiting the Extranet, clicking on ‘grow your business’ on the top menu bar and then going into the Marketing Toolkit. Alternatively, simply put ‘marketing toolkit’ into the extranet search box.

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At our Annual Adviser Forum we will take a closer look at what’s on the horizon and, with support from our provider, fund manager and lender partners, we’ll provide invaluable insight, sales tips and that all-important CPD. We will also have an evening to remember, taking a step back in time for our Gatsby themed gala dinner, where you can enjoy an evening of food, drink and entertainment.

In the evening… Back by popular demand will be our formal gala dinner starting at 7.30pm and including a drinks reception, three course meal and Gatsby themed entertainment. Partners are invited to join us at the Gatsby gala dinner which can be booked and paid for as part of your registration. And finally… At our gala dinner, you will be seated with your colleagues, as tables will be assigned by firm. With this is mind, we hope you may take the opportunity to host your company Christmas parties with your colleagues and us. So, please come along to the Queens Hotel in Leeds on 7th December and spend the day and evening with us. We are sure that whatever may be around the corner in 2018 and beyond, with Tenet at your side, you will feel reassured that you have a partner to help you successfully navigate the future.

The event is open to all advisers, paraplanners and support staff and is completely free of charge to attend including the gala dinner. (The gala

dinner is optional to attend). On the day…

Registration will be open from 9.00am, with our provider partner breakout sessions commencing at 10.00am and concluding at 12.00pm. Our ever popular business trade fair will also be open from 9.00am with networking opportunities for you to take advantage of during the morning and over lunch. The main event starts at 1.30pm, with a business update from Tenet’s Chief Executive, Martin Greenwood, followed by our first keynote speaker, Robert Peston. You’ll then hear from Royal London, M&G, VitalityLife, Aegon, Just, Shawbrook and Bank of Ireland, who will be sharing their current thoughts on the future landscape in their chosen markets. The forum will close with our final keynote speaker, Bonita Norris concluding the business element of the event at 5.30pm.

For more information: Please visit our website for full details on the event.

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Top-up your CPD…

Tenet have been hosting a series of investment and non-investment webinars throughout 2017, covering a wide-range of topical subjects. Each webinar lasts around 30-40 minutes, all of which you can view from the comfort of your home or office. You will have the opportunity to view the webinar and interact with the speakers, asking any questions you may have direct to the presenter.

You can access full details by visiting our dedicated website:


‘No Income Means There Will Be An Outcome’ Income protection is still a hugely undersold product with only 7% of mortgage holders having any in place, and with the rental Market growing faster than the ownership one, its importance is increasing. Income is key to financial survival, yet our clients do not see the need to self-insure should the worst happen to them, as their lifestyle and all that goes with it, is effectively rented and paid by their income. We all know that if you lose your income there will be an outcome, and the severity will depend on what financial plans are in place. That outcome will depend on the advice you gave your clients not just at point of sale but at ongoing reviews. We look at the opportunities in the market for Income Protection and demonstrate ways to increase penetration of this hugely undersold product. Register now to view on-demand: ‘Your essential guide to Second Charge Mortgages in 2017’ There has been considerable change in the second charge mortgage market as a result of stricter regulation and adjustments in lender distribution, allowing advisers to have direct access to these products. Join Claire Rankin, Head of Network Distribution at Shawbrook Bank’s Residential Mortgages team who answers questions around second charge mortgages. This is an invaluable opportunity to learn more about these often-overlooked products, and the scenarios where they might be the best fit for your customers. Register now to view on-demand:

‘Lending Solutions for Today’s Climate: First Start & Contractor’ The economic climate in the UK continues to evolve and with it comes challenges for home buyers; • House price inflation has continued to outpace earnings, leading many to conclude that owning a home or trading up may be out of reach • The “Bank of Mum and Dad” is now a top ten lender • Businesses are looking for an increasingly flexible skilled workforce to manage costs. We examine one of the ways Bank of Ireland can help your clients maximise their borrowing power, especially first time buyers. We will also take a look at the growing popularity of contracting. Register now to view on-demand:

‘Buy To Let – The New World’ Recent changes to the buy to let market mean that this sector has again become more specialised in terms of lending solutions available. As the specialist lender you can bank on, Precise Mortgages provide a market overview of the changes which will impact you and your customers. Register now to view on-demand:

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With the last round of our Non-Investment Roadshows having just taken place and the New Year fast approaching, it’s an ideal time to get the next round of events in your diary. ROADSHOW ROUND ONE Starting on 17 th April, our first round of dedicated Mortgage, Protection and GI Roadshows will be visiting 9 locations around the UK. Our Roadshows always include presentations from a range of mainstream and niche lenders who will update you on their current criteria, packaging and processing information. Each lender will be demonstrating their new tools, products and services, whilst giving you hints and tips to enable you to provide the best possible service to your clients. All of our events are open to advisers, staff, paraplanners and directors/principals, free of charge. Village Leeds South 19/04/2018 Manchester (Merseyside) Haydock Park Racecourse 24/04/2018 Cumbernauld The Westerwood 26/04/2018 Belfast Stormont Hotel 01/05/2018 Birmingham Village Solihull 02/05/2018 Bristol Doubletree Bristol North 03/05/2018 Southampton Hilton at the Ageas Bowl 10/05/2018 London Millennium Hotel Knightsbridge LEADING LIGHTS EVENT – THURSDAY 1 ST FEBRUARY Will you be joining us at the next Leading Lights event? As you will be aware, each issue of Limelight we announce our Leading Lights winners for the last quarter, see page 13. Here we highlight our top performing firms and individuals and put their names up in lights. As a reward for appearing in the top positions, we hold an exclusive annual ‘invite only’ event to say thank you and well done to the advisers and to congratulate them on their success. We are delighted to be able share with you that the next Leading Lights exclusive event will take place on board the Sunborn London Yacht Hotel ( ) on Thursday 1 st February 2018. Look out for invitations coming out over the next month. Date Location Venue 17/04/2018 Durham Ramside Hall 18/04/2018 Leeds HOW TO BOOK The Tenet Events Team will be in touch with you towards the end of the year to ask you to ‘register’ for your chosen events for 2018. This gives you the opportunity to reserve your place at multiple events throughout 2018 and get them in your diary early. (You can cancel your attendance up to 24 hours prior to the event). Look out for your email invitation to ‘Tenet’s 2018 Adviser Development Programme’ coming to you in December.

TENET EVENTS 2018 Dates for your diary…

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These league table results go towards qualifying for the annual event, see page 11 for more details. When compiling these tables we also take into consideration the overall quality of service and advice provided to the end customer – this includes customer satisfaction, adherence to our compliance standards and clawbacks.

Registered Individual

City Gate Aberdeen Ltd Hampden Financial Services Ltd Watson & Company (Bristol) Ltd C N Mortgages The Wright Mortgage Company Ltd McNicholl Financial Services Ltd Fox Davidson Protect Ltd Intelligence Mortgage Solutions Ltd C N Mortgages Purely Financial Planning Ltd

1 st 2 nd 3 rd 4 th 5 th 1 st 2 nd 3 rd 4 th 5 th 1 st 2 nd 3 rd 4 th 5 th 1 st 2 nd 3 rd 4 th 5 th 1 st 2 nd 3 rd 4 th 5 th 1 st 2 nd 3 rd 4 th 5 th

Alan Johnston Jeff Harris Mark Watson Christopher Naismith James Akers James McNicholl Shaun Bond David Nicholson Christopher Naismith Andrew Glover Nathanael Tramontini Hayley Cook Christopher Booth

Top Mortgage Adviser Based on loan amount and number of transactions to take into consideration higher property prices in London

Top Protection Adviser by gross receipts

Protect Line Ltd Protect Line Ltd Protect Line Ltd Protect Line Ltd Protect Line Ltd

Top Protection Arranger by gross receipts

Jeremy Greene Daniel Burgess

C N Mortgages The Wright Mortgage Company Ltd Moneywise Mortgages Ltd Homeshield Insurance Services Ltd GT Mortgages Ltd

Christopher Naismith Brian Wright

Top GI Adviser by gross receipts

Lorraine Morrison Hayley Connolly Graham Thomson

Appointed Representative

League Table – written business for quarter 3 – 2017 For all business via office Net through July, August and September. These are productivity figures based on Q3 only. Leading Lights qualifiers are based on a 12 month period. Qualifying criteria includes quality of business, compliance standards and business productivity.

Mortgage Style Ltd KT Partnership Ltd

Top Large AR (5 and above) by average gross receipts per adviser

Larkbridge Mortgages Ltd Options Mortgage Centre Fox Davidson Ltd

C N Mortgages Purely Financial Planning Ltd McNicholl Financial Services Ltd The Wright Mortgage Company Ltd Hampden Financial Services Ltd

Top Small AR (4 and below) by average gross receipts per adviser

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Striving for a perfect 10 in customer service Tenet is committed to providing consistent, first class, customer service. At the end of last year we were

Consistent Achiever This award is designed to recognise those in our business who consistently do a solid job, demonstrating a great behaviour and are deserving of recognition. Nominations can be made by managers/team leaders for someone in their team, or by anybody for individuals either in their own team or elsewhere in the business. Winner: Cristina Giovanelli Taking ownership Awarded to the individual who takes ownership of a colleague, member or customer issue or request for help and demonstrates commitment to ensure a positive outcome. The issue may not be within the person’s remit or area of responsibility but they still communicate with the customer until a solution has been found. Winner: Rachael Ledbrook Delighting customers Delighting Customers - For regularly surprising customers by exceeding their expectations and demonstrating a personal interest in understanding and meeting their needs, going above and beyond. Winner: Simon Hunt Team player

awarded a three-star accreditation for ‘exceptional’ customer service by Investor in Customers (IIC) which represents its highest accolade. As you will be aware by now, we have been running a ‘striving for ten’ campaign with our employees to help ensure we deliver continual service improvements, campaign, we run quarterly employee awards to recognise key achievers. These are based on nominations from colleagues, underpinned by our ethos that ‘great service to colleagues enables great service to advisers, which enables great service to customers’. We also take into account any unprompted feedback provided by advisers, although we don’t actively ask for advisers to nominate our employees until the end of the year. Our awards and winners for quarter three are as follows: which has proved its worth in us achieving this fantastic award. As part of our ‘striving for ten’

For excellence in teamwork and demonstrating our shared success, whether as part of a particular project or working group, or through the normal course of their work. Shares knowledge and experience across teams, has an open working approach, demonstrating honesty and integrity at all times. Winner 1: Kirsty Lloyd Winner 2: Shelley Fowler

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Nationwide & The Mortgage Works: REAL PEOPLE WITH REAL SOLUTIONS

Your feedback is important to us Your feedback helps us to continually improve the service we deliver to you. So if you have a suggestion or you’ve received some great service from one of our team who’ve gone above and beyond your expectations, please let us know by using our online feedback form: It only takes a few minutes to complete and means we can keep making improvements based on what you tell us is important to you.

At Nationwide and The Mortgage Works we’re always looking for ways to improve our support services for you. We recognise the service you provide to our new mortgage members too, and we’ve recently announced that we’ll pay a procuration fee when you complete a rate switch through Nationwide, or a product switch through TMW. We believe in investing in real people with real solutions, making sure there’s someone on hand to provide you with the right support. So if you need a bit of help, have a question for us or some feedback you’d like to share there are lots of different ways you can get in touch. Your Nationwide and TMW Business Development Manager Our Business Development Managers (BDMs) provide support across the UK for Nationwide andTMW. They can give you up to date product information, advice on making applications and guidance on our lending policy and criteria. And our regional BDMs are there to visit you on a regular basis to make sure you’re up to date with improvements to processing and service, as well as useful tips for a positive experience when you’re submitting applications to us. Broker Chat Launched over two years ago our online instant messaging service Broker Chat now answers over 10,000 queries each month. We’re seeing a growing number of brokers using this service to get a swift response to criteria questions before placing a case with us.

Our Broker Chat team are here to support you from 9:30am to 6:00pm on Monday, and 9:00am to 6:00pm Tuesday to Friday. You can get in touch with one of our experienced advisers using the web addresses below: Or if you’d prefer to pick up the phone you can speak to one of our regional Dedicated Broker Support Team. Take a look at our website for more details: You said we did: Updated Nationwide and TMW websites We’ve listened to your feedback and have recently made some changes to our websites. These include: • Hot topics that link to popular criteria, plus we’ve added bookmarks to make it easier for you to find what you’re looking for • We’ve created a Nationwide packaging support guide to help you receive a quicker offer • And we offer a variety of TMW guides, including our recently updated ‘Making affordability clearer’ guide • We’ve also launched a dedicated new build page you can visit at nationwide- new-build

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John Truswell, head of national accounts at Together, explains how specialist finance can help customers underserved by the mainstream Having been established in 1974, Together has been bringing common sense to the UK specialist secured lending market for over 43 years. Our expertise in lending means we can look beyond mainstream lending criteria to take an individual view of customers’ needs and treat each application on its own merits. When a case involves non-standard property, purchase type, income source or credit, or any combination of these, we aim to find a solution. In the year to 30 June 2017, Together lent close to £1.2 billion, with a current loan book of over £2.24 billion – highlighting the robust demand for specialist finance - and we’ve received a host of accolades for our products and services. Most customers come to Together because they have a specific need we can service because of the products we offer, combined with our flexibility in catering for a variety of circumstances. In fact, these customers may not be who you would typically think of when you hear ‘specialist finance’. Our top three groups of customers are older working families, those on the road to retirement, and high-income professionals. This just highlights the fact that

nowadays many of us may not tick the boxes for mainstream lending at some point or other, and that’s where our common sense comes into play. From providing a mortgage to a returning expat, who can’t go to the high street because they don’t have a recent credit history, to delivering funding to a retired couple that want to buy a property for their children, for us it all comes back to common sense. There’s certainly an appetite for specialist finance and this is evident from the way our business has grown, particularly over the past 12 months, with the average value of monthly loans at £98.8 million, up from £84.3 million the previous year – a 17.2 % increase. Earlier this year, in line with our plans to expand our offering, we took the decision to open up our mortgage range to thousands more intermediaries by forming partnerships with leading mortgage networks, including Tenet. The move was a natural step in terms of our growth plans; significantly widening our distribution channels for our specialist products, so we can cater for customers with needs that other lenders may not be addressing. To support the launch, we enhanced our online portal, My Broker Venue, making it quicker and more intuitive for intermediaries to use. We can now offer a full, instant, decision-in-principle, and we’re working with more intermediaries than ever to deliver specialist finance to their customers.

Our dedicated intermediary relationship team are always on hand to deal with enquiries, so to find out more, call us on 0161 933 7170 or visit

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MARKET WATCH with TENETLIME’ s Research & Technical Specialists

As we enter the final quarter of the year, we have yet another PRA change to contend with in the ‘buy-to-let’ sector, by way of a new process for underwriting when it comes to portfolio landlords. It has been a turbulent time for the buy-to-let market since the stamp duty reforms took effect back in April 2016, leaving new rules for brokers to get their heads around. The changes for portfolio landlords are really the final piece of the jigsaw after the ones to tax and ICR earlier this year. A portfolio landlord is classed as someone who has four or more mortgaged buy-to-let properties. Figures suggest these only account for around 10% of buy-to-let customers and for some members may only be a scenario they see rarely, but it is still important to understand the changes. The purpose of these new standards are to ensure borrowers are not over-exposed and as a result of this the whole portfolio will need to be underwritten, not just the property on the current mortgage application. Lenders will look at existing borrowing across the whole portfolio, as well

as a much more detailed assessment of the borrower’s personal finances. In some circumstances, you may be asked to supply business plans and cash flow forecasts. You may also find that some lenders have different Interest Cover Ratios (ICR) for portfolio lending. Lenders have had to decide whether they are in or out of this market and you will probably feel more of a divide now between mainstream and specialist buy-to-let lenders. In particular, lenders who can underwrite an unlimited portfolio in the background are few & far between. There are a number of lenders who want to lend to portfolio landlord, but have limited the number of properties in the background, maybe to 10 for example. There are others who have come out of the market for now, but are reviewing the situation to see how the market progresses. The most important thing to be aware of is to ensure you collect full information about your client’s portfolio, including property valuations, outstanding mortgage balances, details of rent received and personal income information. Whereas previously for the latter two points an estimation may have been acceptable, it will be important now to get these figures exactly right. For those lenders who need a cash flow forecast & business plan, there are a number of templates available on their websites and the BDM’s are always happy to talk the new process through.

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There will be a number of challenges that comes with these new rules and to support you in this area, we have updated the mortgage research tables with a new column named ‘portfolio landlords’ which can be found under the ‘Products & Providers’ area on the extranet. Whilst there have been no changes to Tenet’s policy following the introduction of this new process, it is important to ensure you are following the lenders individual requirements when it comes to dealing with these cases.

A positive, however, to come out of this is that if you do invest the time with your portfolio clients, they are unlikely to go elsewhere when they are ready to purchase or remortgage their next buy-to-let. It is also unlikely that portfolio landlords will be in a position to apply for a mortgage without using a broker which can only help the intermediary market overall.

As always any feedback, comments or support you require please call the mortgage & protection helpdesk on 0113 2395111 or email

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In the lead up to the introduction of the PRA

Now that the changes have been introduced, Fleet Mortgages has seen a significant increase in enquiries and activity, and we must put this down to our clear criteria – for example, 125% at 5% for our rental income calculation – plus the fact we’re not asking for business plans or cash flow forecasts, simply the submission of a standard application form and a Property Asset and Liability Statement. Our proposition is dedicated to dealing with portfolio landlords – 54% of our business is with these clients – and our appetite to lend in this space is growing. We can do this because of the way we operate with rigorous underwriting, but also an understanding of your needs as an adviser and those of such clients. Complications are ten a’penny in this marketplace – you can rest assured that we will not be adding to them, and would urge you to contact us for more information on how we can support your advice provision to these important clients.

Bob Young Chief Executive Officer Fleet Mortgages

portfolio landlord underwriting changes, a survey suggested half of all Buy-to-Let advisers were not ‘comfortable’ with these changes. It’s clear there was a level of unease about what the changes would mean for brokers and their clients, and how any new processes might work with lenders who were having to enforce these changes. Given our position, and our focus on maintaining a simple, easy to understand process on portfolio landlord lending, we were conscious to not add to this collective sense of anxiety. Brokers would have enough on their hands getting to grips with some lenders’ rather complex criteria, plus information and data requirements which had been ratcheted up, coupled with (what we sense) was a distinct lack of enthusiasm from some to continue lending in this space.

Contact us to discuss a case: Call 01252 916800 or email

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Have we got our protection priorities all wrong?

At Royal London, we have a tool on our adviser website that shows the relative risks of death, critical illness, or being unable to work due to incapacity. We measure these risks using the age and gender of the client and over a period of time prescribed by the adviser. In other words, we make it personal.

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4% had income protection**. We all know the reasons for this – they’ve been well-explored by commentators for years. But surely the time is now upon us when our attitudes have to change? Maybe it’s time to break long-held prescription habits? Is it always reasonable to take the view that if there’s anything left in the budget after buying the life cover it can be used to buy a little critical illness cover as well and ignore income protection in the process? Is it time to look at income protection again? We often talk about income protection being a difficult product to work with - it’s complicated, it has too many variables, the underwriting’s trickier than for other covers, the clients can’t afford it. But that ignores just how far products have developed in recent years. Underwriting has become slicker and more inclusive. It’s easier for the self-employed to get cover. The solution for the client can be crafted and tailored so that it actually fits within the budget. Products these days come packed with added-value features that can make a huge difference for clients and their families. So maybe the days of ‘life cover with a little bit of CI’ need to make room more often for ‘life cover with some added IP’. For this to happen, many advisers need to change their approach to the protection sale. During my 36 years in the industry, I’ve met plenty of protection advisers who have done just that. They’ve taken the big step of accepting they need to place far more priority on talking to clients about income protection. Some of them do so before even touching the subject of life cover. And it’s no great surprise that these advisers generally buck the trend and sell far more income protection than others. *Based on Hannover Re’s interpretation of the Institute and Faculty of Actuaries’ Continuous Mortality Investigation insured lives incidence rates together with their estimate of future trends. Incidence rates for the entire population may be different to those lives that take out insurance products. **Source: State of the Protection Nation March 2017, Royal London. 2,000 nationally representative adults (18+) surveyed.

As an example, a female non-smoker aged 30 runs the following risks before she turns 65*

risk that she’ll die during that time risk of suffering a critical illness risk of being off work for two months or more as a consequence of sickness or accident.

3 % 12 % 44 %

So, to put that in plain English, her risk of being off work through accident or sickness is four times greater than the risk of critical illness and 15 times greater than the risk of death. Of course, depending on circumstances, any of these outcomes could cause financial devastation for the individual and their families. Now, what if an adviser were to suggest to a client that there are three main threats to their health and well-being, all of which could have disastrous consequences on the family finances, but that the good news is that protection insurance is available to offset those financial effects should the worst happen? And what if he went on to say that, statistically, one of those risks is very unlikely to occur during the years the client is paying off the mortgage, or bringing up the family. The second risk is statistically much more likely than the first. But it’s the third risk that has, by a considerable margin, the highest probability of happening and, if it does, could result in similar or worse financial consequences than the first two? If you were the client, which of those three risks would you want to talk about first: the least likely one; the more likely one; or the most likely one? If you’d been told that the consequences of all three could potentially be financially disastrous, then I’d hazard a guess it would be the last one that would attract your attention. Put like that, it is, as they say, a bit of a ‘no-brainer’. And you’d probably also accept the logic that protecting yourself against more likely risks could be more expensive than protecting against the less likely ones. If your adviser goes on to tell you that there are ways to provide cover for the third risk that would work within your budget, you’d probably be pretty interested, wouldn’t you? Old habits die hard In the protection industry, we successfully turn this logic on its head, don’t we? In our recent ‘State of the Protection Nation’ research, 26% of adults in the UK we surveyed said they had life cover, 6% had critical illness cover and only

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A CRITICAL DECISION Providing critical illness cover is good for businesses and good for the people they employ. Unum, provider of employee benefits, explains why.

support the individual and their family, allowing them to concentrate fully on recovery. Critical illness cover payments are tax-free, and can be used in whatever way the person chooses. This could include funding necessary adaptations in the home, taking time off work to care for a loved one, or enjoying a much-needed holiday once they are on the road to recovery. Standard cover should include common conditions such as heart attack, stroke, cancer and dementia, with an option to include additional conditions as add-ons. Some Critical Illness providers offer more than just financial assistance. Unum’s members have access to personalised cancer support, provided by Harley Street Concierge Limited, as well as our

Employee Assistance Programme - LifeWorks - a 24/7 helpline that offers advice on range of work-life issues, including debt, HR matters, legal issues and childcare. No one can shield people from distressing life events. But by providing vital financial support when it’s most needed, you can help your staff and their families overcome the trauma of a serious medical emergency or diagnosis, ease their road to recovery and help them get back to normal more quickly. And that’s good business sense. 1. statistics---uk-factsheet.pdf?la=en 2. and-cancer 3. out-stroke

Did you know that each year in the UK: • 188,000 hospital visits are caused by heart attacks 1 • Almost 120,000 people of working age are diagnosed with cancer 2 • And every three minutes and 27 seconds, someone suffers a stroke? 3 These are sobering statistics – not only because of the potentially tragic impact on people’s lives - but because the success of a business often depends on the health and wellbeing of its employees. The impact of a critical illness on a person and their family can be devastating. Critical Illness cover can help relieve the financial strain that may result following a serious illness. By providing a lump sum 14 days after a critical illness event, employers can


Submitting a portfolio landlord application to Coventry for intermediaries

Don’t forget – following guidance from the PRA, some additional criteria now apply to portfolio landlord applications submitted to Coventry for intermediaries. All of their standard BTL criteria still apply and many of their processes have stayed the same.

There are two ways of doing this: • In Excel: when you enter the information, the spreadsheet will help you establish whether your application fits their criteria by automatically calculating the minimum ICR and the maximum LTV across the portfolio. (Remember to click ‘Enable Editing’ at the top of the document so that you can enter the information). • In PDF: if you have restricted access to a network, or your platform won’t allow you to use the Excel version, use the editable PDF. You’ll need to manually calculate the minimum ICR and the maximum LTV across the portfolio to establish whether the application fits their criteria. • You’ll need to include:

Coventry for intermediaries can’t reach a decision until they’ve received this information and it’s been validated and assessed by their dedicated portfolio underwriting team, so don’t delay in getting it to them. If they’re unable to validate all the information electronically, they may ask you for further information, such as bank statements, mortgage statements, rental agreements and redemption statements. If you have any questions, call them on 0800 121 7788 and select option 2. For information about the full policy and for the Buy to Let portfolio documents, go to intermediaries/lending-policy/portfolio- landlords.

• Addresses • Valuations • Mortgage balances • Monthly mortgage payments • Rental income

FOR INTERMEDIARY AND PROFESSIONAL FINANCIAL ADVISOR USE ONLY. Our mortgages are provided by Coventry Building Society and/or Godiva Mortgages Limited. Coventry for intermediaries is a trading name of Coventry Building Society. Coventry Building Society. Principal Office: Economic House, PO Box 9, High Street, Coventry CV1 5QN. Godiva Mortgages Limited. Registered Office: Oakfield House, Binley Business Park, Harry Weston Road, Coventry CV3 2TQ.

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SECOND CHARGES Cheaper than Remortgaging? Second charge loans are never too far away from the spotlight and continue to be debated across all mediums. Norton Broker Services will continually be on the positive side of second charge loans, as we believe they can be incredibly beneficial to a range of customers.

Paul Stringer, Director of Norton Finance & Mortgages, said, “Initially, it was thought MCD would bring about significant changes in the market. It was a bit of a slow start, I’m sure many will agree. However, more and more brokers are choosing to see the advantages of second charge mortgages, for clients from all walks of life. Many of our brokers rely on our packaging service to gain access to different lenders, but also maintain their relationship with their client, which is very important to them. As the market continues to grow and improve, we want to be able to offer our brokers and clients the best there is out there.”

the subject and not only ensure that our brokers are compliant, but able to help their clients in every way possible. With that in mind, we introduced our packaging service, which allows our brokers access to our whole of market panel of second charge lenders and enables them to still offer the advice to their client themselves. We find that many of our brokers use the packaging service when they have tried to source a deal from their available lenders, but have been unable to find a solution. So, the broker opts for our packaging service allowing them to maintain the relationships with their clients, which we know is vital to many of our brokers. A recent case submitted for our packaging service allowed the broker to find a solution through us, as they didn’t have access to a lender that could help their customer. The construction of the client’s property was restricting the lenders available and we had to change the lenders after a surveyor had attended the property. This is something the broker wouldn’t have had the time or resources to do themselves, but using our packaging service, allowed them to take full advantage of our staff and resources to obtain the best possible outcome for their client.

Since the introduction of the MCD, whole of market mortgage brokers have an obligation to offer advice on second charges alongside first charges. This change in regulation really caused a shift in the way second charge loans were viewed by both brokers and lenders. It may have been a slow start, but brokers are increasingly using secured loans as an alternative to a remortgage, or where a remortgage may not be in the clients’ best interest (e.g. low interest rates on the existing first charge, or high early redemption charges on their mortgage). This increase in demand from brokers for second charge products has triggered a change in lenders’ outlook on seconds too. Due to secured loans no longer being seen as only an option for those with impaired credit, the competition within the market has increased. This boost in second charge loan applications, has meant that in order to stay competitive, lenders have altered criteria to keep up with the demand and keep more in line with first charge options. Since MCD was introduced, we’ve seen a significant drop in rates for secured loans, along with lowered ERCs and a wider range of criteria available for every type of borrower. Our Compliance Manager was involved with the FCA working group for MCD, so we consider ourselves to be knowledgeable about

This information is for intermediaries only & should not be distributed to potential borrowers.

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