Introduction
Who we are and what we do
Mortgage Advice Bureau is one of the UK’s leading consumer intermediary brands and specialist appointed representative networks for mortgage intermediaries. We have over 150 mortgage intermediary firms known as “Appointed Representatives (“ARs”)” within our network and approximately 2,000 advisers operate within these ARs. MAB provides its ARs with mortgage and insurance panels, as well as support and services including technology, compliance, training and marketing, which enables our partner firms to focus on what they do best; delivering expert advice to their customers on mortgage, protection and general insurance products. Our model allows customers to choose how and when they want to research, receive advice and transact. Technology is at the heart of both face-to-face and telephone advice, helping provide greater speed, ease, and convenience, and by doing so delivering an increasingly more compelling customer proposition.
Business Model
The majority of our ARs trade under the recognised and respected Mortgage Advice Bureau brand through a franchise style model operated by the Group. MAB branded mortgage shops (currently c. 30) also form part of this model. Mortgage Advice Bureau is particularly active in the estate agency and new build sectors both of which are major lead sources for our partner firms. MAB is the only mortgage intermediary brand with UK wide adviser coverage for face to face advice, alongside a rapidly increasing capacity for telephone advice. This USP is being leveraged to secure major regional and national lead sources that will be serviced by MAB branded distribution. This is a new initiative supported by developments in technology, that is already gaining momentum, and adding further value to our key branded business partners as well as those considering joining MAB.
MAB has long term contractual strategic partnerships with its ARs, and our proposition is designed to attract high quality medium to larger sized firms, that are forward thinking and want to grow their business and market share. Once an AR joins MAB, we work closely with them to help them grow and achieve their ambitions.
The Group maintains all regulatory FCA permissions
The Group’s network offers advice on over 12,000 mortgage products from over 90 lenders, including residential and buy-to-let mortgages. The Legal & General Mortgage Club, one of the largest and most successful UK mortgage panels, is highly respected by lenders and has been adopted by the Group as its mortgage panel of choice.
We operate a revenue share model with our ARs and therefore our interests are aligned with those of our ARs. Our revenue consists predominantly of procuration fees from lenders on the arrangement of a mortgage, insurance commissions from our panel of insurers on protection or general insurance policies being arranged for our customers, and also client fees which are paid by the majority of underlying customers for the advice that they receive. The proportion of revenue falling into each category for the last two financial years is as follows:
MAB’s recognised revenue consists mainly of mortgage procuration fees, insurance commission and client fees, and this is all received by MAB. We then pay our ARs their share of revenue on a weekly basis, and then they pay the advisers they employ. As a result we have a cash generative and capital light business model, which enables us to pay out 90% of our profits after tax as dividends. MAB has a risk mitigated, scalable model and carries no debt.
To view our KPIs for the last four financial years head over to our results centre, they demonstrate the strong consistent growth that MAB has delivered.
We measure the development, performance and position of our business against a number of key indicators:
1 Excludes directly authorised advisers, MAB's later life advisers and advisers from associates in the process of being onboarded under MAB's AR arrangements. Includes Fluent's second charge, later life and bringing advisers who have higher revenue per adviser that first charge advisers.
*In addition to statutory reporting, MAB reports alternative performance measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). The Group uses these APMs to improve the comparability of information between reporting periods, by adjusting for certain items which impact upon IFRS measures, to aid the user in understanding the activity taking place across the Group's businesses, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive purposes. A summary of APMs used and their closest equivalent statutory measures is given in the Glossary of Alternative Performance Measures.
Mortgage Advice Bureau Annual Report 2022
Strategy
Technology is central and integral to our business model, it is developed in-house, and directly benefits MAB advisers and customers. We are investing in a number of transformational technology developments, and are excited about the impact that this could bring to MAB in the shape of increased productivity and efficiency of existing advisers, as well as our ability to attract new advisers and lead sources due to the stand-out benefits our technology will be delivering.
In our industry as a whole technological transformation has been slow and there has been no major process change in the mortgage and home-moving process. In no small part this is due to the importance, complexity and sheer enormity of buying a home. However, the industry will inevitably see meaningful change in the medium term and MAB intends to continue to be right at the forefront of any innovation, leading as opposed to following. Put simply, we want MAB advisers to have the best and most straightforward technology tools to enable them to procure and help more customers, offer a wider range of products and services, and, most importantly, we want to use technology to design innovative new processes and provide an overall experience for customers that is second to none. A key part of this is delivering digital tools that can be used to support a customer’s research process and help them to apply for a mortgage.
We remain advocates of the importance of customers receiving full advice and this will continue to be our primary and most important focus. However, we will explore how some customers can get the mortgage they want through more expedient means, as they increasingly seek to research in a more remote and digital way.
MAB has made (and continues to develop) several key strategic investments, funded through its cashflow to date, and will continue to consider new opportunities that arise, as and when they are deemed to clearly support, enhance and accelerate our agenda of increasing our market share and profitability. Whilst our investments to date have been relatively modest in size, we also consider and appraise larger investments to help accelerate the development of our customer and adviser proposition, lead generation, and distribution.
We have started testing overseas markets through our joint venture in Australia to ascertain the feasibility of scaled cross border expansion. The signs are encouraging against a market backdrop that in many ways is similar to that of how the UK mortgage market was over a decade ago. Our technology developments will allow us to enter new markets far more easily, and accelerate growth in those markets.
MAB is also exploring home-moving as a process in its entirety, from start to finish. Currently MAB is involved in mortgages, protection, household insurance, surveys and conveyancing. In the medium term, we intend to expand our involvement beyond the mortgage transaction, through vertical integration with the ultimate aim of using technology to assist in the whole home moving process for a customer and increasing the footprint of our ancillary services that are capable of being provided digitally to ease that process and add further customer value. Longer term, our goal is to help and guide our customers in their property journey throughout their lives, which include pre-purchase, rental, and later life lending. This will increase our target market considerably, as well as widen the range of products and services delivered by MAB face to face, over the phone, or for more simplistic offerings, on a self-serve basis for those who are comfortable transacting in this way.
In summary, our strategy remains focused on securing further growth through technology, lead generation and specialisation which will increase our market share and the number of mortgage completions in all market conditions, enabling us to continue to deliver strong returns to our investors.