Recently Enness was approached by Specialist Banking magazine who were looking to get some expert insight into why you would select a specialist bank following a recent poll they ran on their website. As Head of Specialist Lending, I gave my thoughts on this diverse subject.
Read the article here: specialistbanking.co.uk/article
Below you can read my full answers:
What are the main reasons you would use a specialist bank for your client?
I think the poll summarises the situation quite well overall. However, I think there are a number of factors that underpin the findings.
Traditional underwriting techniques are often employed by the specialist lenders using experienced personnel in the banking, real estate and credit sectors, not just adopting a ‘one size fits all’ tick box approach which sadly many of the high street lenders seem unable to move away from. As some of these lenders have become less competitive overall, we have seen them lose some of their best staff to the specialist sector which just makes them even weaker.
From an Enness perspective, I don’t think we have seen global wealth disseminated so widely, and that has been reflected in the UK Real Estate Market and the work we do. Often the high street lenders simply don’t have the skill sets to deal with this diversity and shy away from it all too easily. For example clients that carry a perceived additional risk for various reasons including being domiciled in higher risk countries or by virtue of the industry they work in or even source of wealth can be shunned by the more traditional lenders (sometimes even by their own banks) and need specialist advice by niche brokers who understand their requirements and can bring specialist lenders to the table to work with them to achieve their goals, more often than not bringing considerable benefits to the UK economy.
Additionally, many of the lenders in the specialist space have realised that they are only as good as the weakest link in the process. Therefore, we have seen them choose their professional partners very carefully i.e. valuers, solicitors, QS’s etc often a very different pool of people to those employed by the high street who tend to use the more traditional firms who in some instances are not fit for purpose in the current market to meet expectations.
Why are these your main reasons?
Ultimately, we want the most appropriate overall solution for the client delivered with certainty and in a timely manner. It doesn’t really matter who the provider is at the end of the day, just that we ensure that the best solution sits in the specialist space.
What is your reaction to the poll results? Do you agree?
I think the poll results do reflect the current market sentiment. Nearly 60% was down to product and service. If you roll into this speed and cheaper rates (which essentially go hand in hand with product and service) that’s nearly 85% of your reasons as to why lenders in this sector are used. The bulk of the remaining reason is ‘trust’; again, directly linked to the other aspects previously mentioned in terms of brokers being confident that these lenders will deliver.
Should brokers look to specialist banks more?
I don’t think brokers specifically set out to use a lender within the specialist lending space. However more and more I think brokers will be steered down that path for all the reasons listed in the poll as the more traditional lenders seem to have no incentive to close the gap, and if anything, moving further away from the coal face.
Enness have a well-established international presence now and this has made us acutely aware that such a specialist banking sector isn’t enjoyed by borrowers the world over, the UK sits in a very privileged position in this regard. No one likes the uncertainty Brexit continues to bring, however I believe that the specialist banking arena is just one of the reasons that the UK economy will flourish and continue to be the world’s financial centre of excellence and opportunity in a well-managed framework.
Do specialist banks offer better service than high street banks?
I think it would be unfair to label the high street lenders as providing a ‘bad’ service. In my experience, the individuals we deal with within these institutions actually provide a good service within the constraints their organisations place upon them. Sadly, their processes are lengthy, clunky and often require an onerous amount of work on the part of the borrower early on without any indication as to whether the bank can assist at all and on what basis. Typically, borrowers want an early indication of lending appetite and on what terms. Many just won’t accept a process that can last many weeks without even an indication as to what funding might be forthcoming.
I don’t think we will see this situation change any time soon. Some of the high street lenders are funding the sector indirectly by providing credit lines to some of the specialist lenders so it could be argued that they are doing their bit for the economy, just in a slightly less traditional format…
For any specialist lending enquiries please contact Chris Whitney on firstname.lastname@example.org or call (+44)7464480077