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CV: In 1991 Ms Blatchford graduated from Brighton University with a BA (Hons) in Business Studies. Between 1991 and 1998 she worked for Family Assurance Friendly Society ultimately as direct marketing manager looking after the marketing of bonds, children's savings and Isas. In 1998 she joined Legal & General to set up a campaign marketing team for the intermediary side of the business. Since then she has had various roles across product and distribution marketing including intermediary marketing director from 2003 to 2007. Ms Blatchford was appointed commercial and marketing director of housing in March 2007.

Mortgage Adviser: How did you move into your current role?

Karen Blatchford: I have been in this role little more than a year but I have actually been with L&G for more than 10 years. Previously I had worked on the intermediary marketing side but I had been involved on the housing side in things such as the launch of the mortgage network. Commercial and marketing director for housing was a new role.

MA: What have you been tasked with doing in this role?

KB: There were three challenges. First of all, it was how we maximise the retention and recruitment into the network. When we launched it in 2004 we had a big push around attracting the advisers but it was really important we did not let that go. Second, there is the protection and general insurance side and how we can really leverage that. Third, it was about raising the profile of L&G within the housing arena. We have always had a very successful mortgage club but we were trying to expand that on the directly authorised side and also have some more consumer awareness, which we are still dabbling with at the moment. If you say to people L&G in the housing market there is a lot of awareness among intermediaries but not necessarily among customers.

MA: Given what is going on in the market, has L&G changed its approach to recruitment?

KB: It is really important for us to retain our existing accounts and work with them but equally we are actively looking to recruit accounts into our mortgage network. There has been a lot of proactive interest in L&G recently, because of our financial strength, the mortgage club and our well rounded proposition. We are actively talking to firms. Recruitment for us is still strong.

MA: Given the level of interest are you having to turn people down?

KB: We are quite selective anyway. We do not take on many small firms. We encourage small firms of one or two advisers to join our larger firms. Because of our compliance regime we look at medium to larger firms. We have quite strict compliance guidelines so we carefully vet firms that join the network and that has paid dividends because we have heard back from lenders that L&G's quality of business on the appointed representative side is better than some of the other networks.

MA: How many members have you got?

KB: On the AR side we have 1500 advisers in about 80 firms. On the directly authorised side, who are just using the mortgage club and some just using our mortgage club and selling our protection and insurance, we have another 1500 advisers. We have had some very large ARs move onto the DA side. We have an active programme to drive up usage of the mortgage club, not only among people who have not used it before but among people who have used it on and ad hoc basis.

MA: What are you doing to increase the amount of protection business arranged by mortgage advisers?

KB: We have had specific targeted campaigns where we have put together training and promotional material that can be used both by our business development managers and specialist training teams to go out and support advisers in how to sell protection. We have also provided them with customer facing material they can use as well so when they are in the sale they can have those conversations. A lot of it is about presenting the opportunity up front so when the customer starts the mortgage, remortgage or buy-to-let journey with the adviser they actually position protection as part of the sale.

MA: What has been the major barrier to more protection business being written in the past? Has it been the positioning of protection at the end of the mortgage conversation?

KB: Yes, definitely. A lot of it is around customer perception. I am a great advocate of looking at it from the customer's point of view and often when people are taking out a mortgage they are very focused on the house purchase. If protection is not introduced right at the beginning of the sale then often they have gone right through the mortgage sale and the customer assumes it is the end of the process and they are not engaged. If protection is introduced up front and we are going to make sure you can keep your home no matter what happens then it becomes much more important.

MA: Have you got a target for how much protection business L&G would like to see advisers write this year?

KB: We have not got a specific target. What we have been doing, which we have not done before is we have started to look at penetration rates within individual businesses and with advisers. We are working with individual business to look at how they work and how they sell and working on plans for how they can improve. At the moment we would expect remortgages and buy-to-let to only be about half the penetration we would get on the purchase side and we would expect to increase that significantly. We have a database where we take in the mortgage and protection data and we look at how they are performing in terms of selling protection, protecting the whole of the mortgage and so on. It shows different penetration rates and protection levels and whether their business stays on the books. It allows the adviser to look at how they are performing and set their own targets. The adviser can benchmark themselves against how well other advisers are doing.

MA: How unique is L&G in drilling down that far into the type of mortgage and protection business its advisers are arranging?

KB: When you are within a network you rely on that network for compliance but the depth of that can vary. We stand shoulder to shoulder with firms so we make sure they have a point of compliance contact and each firm has its own approved person so they have to take compliance responsibility and cannot abdicate that. Equally, we are using the expertise of our own compliance areas and business standards. We do some file checking and auditing. We will go into firms and help them where we think they need development. We take a lot of the reporting back to the FSA off their hands. We have developed a management information scorecard to help them understand where they are with TCF, whereas a lot of other networks give guidance but do not go in there and support advisers with that. What we are trying to do is create the maximum selling time for advisers because there is so much paperwork for them nowadays in terms of record keeping that we want to make it as slick as possible. You have more and more regulation but consumers have less and less time and want to be able to come in during their lunch hour and do the mortgage. It is really important for us that while we satisfy mortgage regulation, it is an easy and slick process for the customer so their needs can be satisfied at the same time.

MA: Can protection business make up the shortfall in mortgage procuration fees that advisers are experiencing at the moment?

KB: What has happened, particularly in the last five years, is a lot of advisers have almost become order takers for mortgages. They have either not had the time or some newer advisers into the industry have not had the rounded knowledge advisers used to have. A mortgage sale is talking about the budget you need, the products available and going through a process. The protection side is very much an emotional sale. It is about understanding the customer needs. The two need to go hand in hand. Protection is a harder sale because you really need to get into what the customer is trying to protect. Some advisers have lost some of the skills surrounding protection. It is about spending more time with each customer. If an average £125,000 mortgage you earn about £500 procuration fee, if you have just sold life cover, which for a joint case would be about £20 a month, the adviser could earn another £400. If the adviser actually sat down and did critical illness and other products it could actually earn them about three times as much as the mortgage so it does plug the gap on that income by spending a bit more time. It is worthwhile spending that time because there is good commission available.

MA: How hard will it be to change the mindset of some mortgage advisers?

KB: It will be a big jump for some people. It is a cultural change and a mindset change. We have set up a specialist team of five business development managers who can support the day to day development of firms and talk to them about the protection sale. We are rolling that out to our businesses to help them. We also have a programme for new advisers to make sure from day one they understand protection. But I do think it is a big challenge because an adviser who was new to L&G but not new to the industry said they had almost forgotten to ask at the end of the sale is there anyone else in your family looking to take out a mortgage. The majority of people do ask friends and family where they got their advice from. It is important to go back to basics and ask for referrals and talk about how to sell protection.

MA: A lot of mortgage advisers are looking at new areas such as equity release and savings products to make up for a reduction in the amount of mortgages they are arranging. Should mortgage advisers be considering branching out into these areas rather than selling more protection?

KB: You have got to maximise what is in front of you. If you have got customers coming in then you need to make sure you are getting the most for that customer. You have a huge client bank sitting there and during the days of order taking you may not have maximised that sale. We have a customer relationship management programme at L&G and a system we use called Lifeline that helps advisers maintain their databases. We give them suggested touch points of when to go back to the customer and produce marketing literature. We do a newsletter called In Touch, which they can actually badge as their own and send out to customers to make client contact. Customers are getting more sophisticated and they do not necessarily just want to talk about the mortgage. It is important to look at a more rounded proposition and that is the way the customers are going anyway. It is really important to look at things from a customer point of view. We are at the early stages. It is too early to say where we are going on that but with our own wealth proposition we are looking at how we can utilise our own savings products such as tracker Isas and whether we could take those into the mortgage world and enable advisers to recommend or refer those products.

MA: Given soaring fuel prices and inflation, is protection currently a harder sale?

KB: A lot of people spend £50 a month on satellite television and do not spend £25 a month making sure if they die their house is covered. That astonishes me. Customers do not understand exactly how much protection costs they think it will cost hundreds of pounds. With the focus on making sure there is provision within your family the protection sale becomes more important and easier to talk about. We have to be careful we do not scare people but when times get tough you might cut back on other things but protection becomes more of an important sale.