Every month we invite an industry regular to pop in for a brew and a chat with MyIntroducer to find out what they're up to and how business is fairing so far in 2010.
Simon Stern of Prestige Finance 29 October 2009
Simon Stern, Director at Prestige Finance, the longest established secured loan lender in the UK, talks exclusively to MyIntroducer.com. With funding provided by the UK based banks HBOS and Barclays,
Prestige offer a unique Loan Management Service, which means their loan
book is not sold on but is managed in-house by their own experienced
collections team.
MYI: What makes Prestige Finance different from other current secured loan lenders?
Simon:
In one word, "people". From the Directors down to the most junior of
staff, it is the attitude of the staff that makes this company what it
is. Obviously product and service come into it but without the staff
and the way they are with our brokers and our borrowers, we could not
have survived as long as we have, especially through this very
difficult trading period.
MYI:
Based on the events of the last 12 months Prestige Finance seems to be
weathering the current climate very well. How do you see the next year
going?
Simon: It has been a very difficult last 12 months
for the company and without the support of our banks and private
investors we may well have found the going even tougher. In regards to
the next 12 months, we don't anticipate too much changing. We will
continue to lend and hopefully will increase lending volumes over the
year whilst at the same time concentrating, as we always have done, on
collections and working closely with our borrowers to ensure they
maintain their monthly repayments. There will also be several
regulatory changes over the coming 12 months and not only do we have to
be prepared for these changes but also we will need to work with our
brokers to ensure they are equally well prepared.
MYI: What new and innovative services do you offer to help brokers who are finding it difficult in the current economic climate?
Simon:
I am not sure that we need to offer "new and innovative services to our
brokers.” What we believe is more important is to provide consistency
to our brokers, whilst delivering a clear message to them as to what it
is we can do to support them. During the past 2 years, despite the
economic downturn, we have enhanced our website which has helped
brokers considerably when underwriting and processing loan
applications. Obviously brokers want higher LTV's and reduced rates
enabling more of their applicants to take up loans and we will continue
to look at ways in which we can improve our lending criteria over the
next 12 months.
MYI: As the
UK's longest established secured loan lender, what are the major
changes have you seen in the industry and what are your projections for
the future?
Simon: This is a difficult question to answer
as there have been so many changes in the 25 years I have been working
in the industry. The biggest change of all is the acceptance of not
only the Second Charge market as an important part of the mortgage
industry but also the development and acceptance of the adverse credit
market both in first and second mortgages. Then there is the huge
amount of regulation that has come into the market. When I started in
1984 we were still working with the old Money Lenders Act. Now we have
not only the Consumer Credit Act, we have the FSA and especially TCF.
We also have directives coming from Europe and following the
consultation paper issued last week by the FSA, it would appear that at
some point in the future second mortgages could well be regulated by
the FSA. However, should a new government come into power sometime next
year, it could all change again.
In regards to the future, we
will just have to wait and see. As I have already said the market has
changed so much in such a relatively short space of time, what it needs
most of all is stability. We are all hoping that there will be new
entrants to the market in the near future but I think any new lender
will be cautious in terms of both criteria and volumes, especially
whilst there is still considerable uncertainty surrounding both the
property market and the risk of higher unemployment.
MYI:
The government and the FSA seem to be calling for secured loans to be
regulated. What effect do you think this may have on the industry?
Simon:
Again, this is a difficult question to answer. However, it does seem to
be widely accepted that secured loans (I prefer to call them either
Second Mortgages or Second Charges) will at some point in the future be
regulated by the FSA. Personally, I believe that the Consumer Credit
Act (CCA) works perfectly well giving both the consumer and the lender
the protection they require.
The argument put forward by the
FSA that all types of mortgages should be covered by the same
regulatory body, is in my view applying a simplistic approach to
something that is a lot more complex than it appears. Therefore, I
don't believe the FSA has yet done sufficient research into our
industry allowing them to fully appreciate what it will involve should
they take on Second Charges. Then, as I have already said, a new
Conservative Government (if they win the election) will probably change
things again which will simply add more cost to both brokers and
lenders, probably not benefit the consumer and just compound the
problem.
MYI: Many brokers seem
to be moving towards the unenforceable agreements products to help to
generate extra income. Have you seen many enquiries at Prestige and has
this affected your business?
Simon: Unfortunately, we
have seen a rise in the number of complaints regarding "Unenforceable
Agreements" and in some cases the complaints are coming from companies
that were previously brokers. I think it is appalling that brokers that
so relied upon lenders for their income are now trying to attack those
same lenders. It has not affected our business as yet but obviously
each complaint has to be dealt with and responded to in the correct
manner.
MYI: With the rise of
CMCs do you think that additional regulation will be introduced to
ensure these companies have a clearer set of parameters in which to
operate?
Simon: I certainly hope so because there is a
vast difference in the quality of CMC's. At the moment, with the issues
surrounding amongst others Payment Protection and Unenforceable
Agreements, many CMC's believe they could be "filling their boots" but
have to understand these are not simple matters. Hopefully, additional
regulation will in time address some of the issues and the
understanding of what are complex matters.
MYI:
With the demise of FISA the AFB seem to filling the gap. What role do
you think they should play from a lender's perspective?
Simon:
The AFB and Robert Sinclair in particular, have done a fantastic job in
very difficult circumstances in providing support to the broker
community. As far as lenders are concerned, bearing in mind that we are
represented by the FLA, what is essential is that regular communication
takes place between the respective trade bodies and this has begun to
happen.
MYI: Single Premium PPI
is no longer a product on offer and many brokers are now shying away
from offering alternative products through fear of prosecution. What
are your thoughts on how this will affect the market place and the
public as a whole?
Simon: PPI has become a huge emotive
subject for the industry and judging by recent events a very expensive
one. I have always maintained that Single Premium policies were right
for a certain sector of the market, providing it was sold correctly and
the borrower was fully aware of the terms and conditions of the policy.
The big concern now is that with the huge negativity surrounding the
product, you now have a situation where too few borrowers have
insurance against redundancy and disability, which surely cannot be
what the Government intended - certainly it is not right for the
present economic climate. Efforts have to be made to introduce products
that are right for the consumer as well as allowing the broker and
possibly the lender to offer their clients protection and at a rate
that is both right for the consumer and commercially viable for the
broker. The problem is that we appear to be a long way from that
happening!
MYI: Do you foresee any major positive lender criteria amends before the end of 09?
Simon:
The short answer is "no”. Lenders, including ourselves, are working
closely with brokers to try and find ways criteria can be enhanced to
allow more applicants to obtain loans. However, it is imperative that
lenders continue to lend in a responsible manner.
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