ING Direct to Close Broker Channel

ING-DirectOne of the best lenders in Canada is closing its mortgage broker division. ING Direct Canada made that announcement today.

ING’s last day for broker submissions is Feb. 16, 2013.

It’s a bitter pill to swallow for the broker community, but one that was a possibility from the minute Scotiabank acquired ING in August.

This strategy change is a 180-degree reversal for ING, which currently sources most of its business from brokers. The company will be re-branded (i.e., lose the ING name) and sell mortgages direct to consumers via call centres and the Internet. ING is Canada’s 7th biggest broker lender according to D+H, and largest direct-to-consumer mortgage lender.

In an email to brokers, Scotiabank and ING said: “We felt that both ING DIRECT’s and Scotiabank’s objectives would be better served by allowing each entity to focus its efforts on its own relative strengths.”

The reason given for the decision was overlap in Scotia and ING’s broker offerings. The main overlap is that they both offer bank-funded mortgages through brokers. What isn’t overlapping is:

  • ING’s strong customer-focused branding
  • ING’s generally better rates (for status brokers)
  • The fact that ING doesn’t require branch closings (which Scotia imposes on lower-status brokers)
  • ING’s far better penalty calculation
  • ING’s better prepayment privileges
  • ING’s automated rate holds
  • ING’s DND program, and
  • ING’s outstanding blend and extend option, provided at fully discounted rates.

“ING has been so revolutionary. It has changed the way banks operate in Canada,” said George Hugh, CEO of Taurus Mortgage Capital and ING Direct Canada’s former head of mortgage origination. “It’s sad to lose a player like that. There is nothing positive about brokers having one less choice.”

“ING had a big impact on delivering value to mortgage customers,” Hugh adds. “It’s not coincidental that when ING entered the market, no-haggle mortgage offers started appearing (from competitors).”

ING launched in 1997. It started its broker division after acquiring First Marathon Mortgage in 2002. (Interestingly, First Marathon is relaunching a new broker lender in February.) ING and Scotia are hoping to move some ING BDMs and underwriters to other positions within their organizations, but job losses are to be expected.

Today’s ING news follows the closure of FirstLine’s broker arm by CIBC in July. FirstLine was previously the largest broker lender in Canada.

“This was inevitable from the day that Scotia bought ING, and anyone who thought otherwise does not understand why banks buy other banks,” says Ron Butler of Butler Mortgage.

“All of us in the channel need to understand we are entering a down cycle in our business, end of story. Likely, it is going to get a fair bit worse before it gets better, and better may be seven years away. We can moan and cry and assign blame with a vengeance but smart business people just suck it up, change the way they operate and work harder.”

Hugh, however, remains positive on the broker channel. “Everyone outsources portions of their business for economic reasons,” he says. “Brokers are a variable cost for lenders.”

For its part, Scotia stated today: “Rest assured that Scotiabank remains fully committed to the broker market.” And why shouldn’t it? It benefits from a #1 ranking in broker market share, a ranking that should strengthen in 2013.


Rob McLister, CMT

  1. Scotia stated today: “Rest assured that Scotiabank remains fully committed to the broker market.” Hollow corporate lies!
    Sad news for the broker industry. We can see where this is headed. Next weeks news will be Scotia slashes Broker commissions.

  2. I think you’ve covered this story very well and with accuracy. Good journalism. Thank you.
    Peter Aceto
    President & CEO
    ING Direct

  3. What??
    FirstLine, oops, I mean ING, acquired by a bank and then closed?
    What a surprise ;)

  4. Sound familiar…
    Scotiabank is committed to preserving everything that you have come to love about ING DIRECT over the past 15 years. We will continue to operate separately – as a wholly-owned subsidiary — and deliver excellent service via our cafes and award winning call centers, simple and transparent products, and all around great value for your hard-earned money.

  5. Not surprising…although it hurts. Another balance sheet lender bites the dust. Unfortunately the new lenders that come in to replace them are all securitizing lenders who offer the same cookie cutter products that we don’t need.

  6. Scotiabank obviously wasn’t committed to preserving “everything.” I’ve come to like both my ING mortgage and the broker who got it for me. Now I have to make a choice at renewal and unless ING has a rate my broker can’t match, I’m gone.

  7. I was expecting this news. It worries me this trend will continue and choice for mortgage products narrows down for the consumer and broker. I would only hope that Scotia adopts ING enlighten approach and offer products that made ING great. The signing of clients at the branch should be the first thing to go!!

  8. Scotia has already changed their broker offerings for multiple revenue property owners… Remains fully committed? Nope, already pulled back.

  9. I have to agree: like our ING mortgage. Like our broker better for having the integrity to bring us ING with no expectation of our return.

  10. ING was a lender that brokers could hang their hat on. Friendly in almost all respects. The fact is other big banks could not make the money they do with their way of doing mortgage’s. I hope a lender out there picks up the pieces and puts together a distinctive mortgage product that is similar to ING’s and Firstline’s for that matter. First Firstline now ING, new lenders need to figure out why these where so popular and emulate them. Once Emulated then acquired and hence massive profit. Monolines unfortunately haven’t done what it takes to stand out in the lender crowd.

  11. I think we should all take a moment to thank a great group of people at ING who did such a great job over the years. All of the great sales team, a super group of managers, underwriters, document people and funders deserve a huge thanks from all of us. They must all have a lot on their minds today.
    As Paul Grewal says “the greatest business accomplishment is to create something from nothing” and that is certainly what happened at ING.
    Here’s a glass raised to all of them.

  12. no surprise really after seeing what the good folks at CIBC did to FirstLine…so is this the new bank strategy…buy up all the good mortgage companies and shut them down..someone shld wake up the competition bureau (do we even have one?)

  13. These developments are concerning to consumers like myself. Less choices for us. I currently have a mortgage with Scotia and is coming up for renewal in about 5 months. I am wondering whether I can get <3% rates for 5 year fixed from the bank branch or is it recommendable to go through a broker? Any suggestions appreciated. I want to stay with Scotia due to other banking businesses that I have with them.

  14. You’re a good broker only as far as the lenders that are willing to work with you. With CIBC collapsing FLM and now ING, the objective of the big banks is simple: get the independent brokers back to where they used to be 20 years ago and that is specialized financing (Alt-A, B, private funds).
    It really wouldn’t surprise me to see TD and eventually Scotia fold from the broker channel as well. The amount of money the broker channel brings them is apparently irrelevant. CIBC proved this with FLM and now Scotia is proving it with ING. We can talk about consolidation, cost savings, etc. but there is a higher purpose here.

  15. yea, and why do i get this feeling that little guys like me are gonna get screwed in the end..with all these ‘bank manoeuvers’

  16. I like your post Jeff.
    I don’t think it is hard to understand why ING was so popular… The problem is that the ING model just wouldn’t make enough money to keep the big banks happy; while the model that we all hate is exactly the one that keeps the big guys so profitable in the first place.

  17. Lior nailed it right on the button. Brokers will eventually be squeezed out of the “AAA” business by the big banks. If they think that Monolines have a chance at competing with the big banks, think again. The banks have deeper pockets and low cost balance sheet funding.

  18. oh noes! my favourite all time lender. loved ING and considered them the best AAA lender overall. scotia brokerage channel. worst ever to deal with. who cares if they kill it. good riddance, what a joke.
    most of you should see the writing on the wall by now. my father was a stock broker. see very many of those around anymore?

  19. The broker does what the big banks don’t
    – provides all the choices
    – they don’t waste your time because your the first person that sat in front of their desk that day
    – meets with client on clients schedule
    – provides one person to handle everything rather than be bounced from one bank employee to the next
    – acts as the angel and the devil in your head and doesn’t encourage you to do something that will not be in your financial reach
    – becomes a friend and continues to help you long after their commission has been received
    – brokers are little people with big hearts and it shows with every satisfied client

  20. ~~weep~~ That was beautiful. Do Broker’s save beached whales too?
    Brokers client retention rates are the same as the heartless Banks so Brokers overall are typically meeting the needs of clients no better, no worse than any F.I.

  21. People should be a bit more accepting and open minded to keep it healthy, I have worked on the bank and broker side both, they both have plus and minus sides, no one can deny that. If you are doing your job with due diligence for both the client and lender, you can do it anywhere. It is simple.

  22. With all these channels closing (Ing, Firstline, some banks, etc.) is a mortgage broker still relevant? Any thoughts anyone?

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