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MSE News: Tesco to sell mortgages
Former_MSE_Guy
Former MSE 1.7K Posts
"Tesco Bank will start to sell mortgages from Monday in the supermarket giant's latest foray into financial services ..."
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Their product wont be available via whole of market advisers (as it is nil commission) but will be available for independents to recommend (as independents do not keep commission where it is paid but refund it to client). Although the terms are such that an independent would not likely recommend them.
It doesnt seem like they want much business at the minute. Having worked for RBS in the past (who run their credit cards...or used to anyway), a lot of tesco customers are only interested in the points...even if technically its not great value.
I think if they decide to throw their full might behind this it could put some brokers out of business.
But, because:
- you cant apply in store,
- theyre not market leading rates by any stretch,
- and theyre not opening up to advisors to sell their products,
that theyre not really interested in mass market applications at the moment.
Quite a low key launch really when i was expecting something a lot bigger.
The retail banking sector may undergo a significant change in the next 10 years. With new providers taking business away from the major players.
However, im sure Asda and M&S will enter the ring at some point among others. Whatever will be will be i suppose.
In any facet of business. The professional service providers will survive. Mortgage broking attracted its fair share of cowboys in the boom years. There'll always be a niche market. Given the poor standard of financial literacy that's evolved more recently. So some people will require guidance and assistance.
M&S have already hooked with HSBC to provide current accounts. Though all the accounts carry monthly fees.
Wouldn't be surprising to see a resurgence in building societies at a local level. Given that mortgage lending as a whole isn't highly profitable to the major banks.
I'm no mortgage professional but have a little bit of a business head. Surely, it's better to launch with rates that are a little higher, cherry-pick whatever applications you do get and then start lowering your rates as your underwriting criteria gets a little more tweaked.
With the financial power Tesco have behind them, I'd see this as their plan - looking at it from an outsiders point of view.
Just move towards independent status and away from whole of market. Start by giving people the choice and explain it without bias. You will be surprised just how many people will choose independent over whole of market once they realise the difference. However, until explained they would go whole of market. Maybe try your next few cases by using the non-commission payers as well and cost them over the term of the deal and see how they compare (do it behind the scenes so you can see the difference for yourself before you try it in the real world).
Tesco have been in the protection and pension market for over a decade. Didnt create a ripple. Poor quality products and not cheap pricing. Typically bought by those that wouldnt seek advice anyway and those that didnt realise they were buying poor value.