Secured Loan Agencies Now A Valuable Asset
Monday 19th May 2008Michelle Blair, Broker Liaison, Loans Etc.
The last few months has seen a significant change in the distribution methods of secured loan lenders. What has become evident to lenders in recent months and perhaps is an indication of what lays ahead for distribution even when the good times return is that in the niche credit broker market of secured loans ,lenders don’t need an army of reps -otherwise known as BDM’s, and don’t need to accredit every broker in the country directly to get their business.
When funds were more freely available and lenders were bending over backwards to get brokers support, in between all the lavish hospitality events that included annual golf days, high profile racing trips and liquid meetings in various exotic locations like Puerto Banus , all that was required to secure a distribution agency with a secured loan lender was sight of the appropriate licences and a signed accreditation form.
Experienced sales staff that learnt and earned their trade with large brokers admired the Porsches and Bentleys in the car park so they went off and got their Cemap qualification, took a couple of good staff colleagues, borrowed the broker database and they were quickly up and running in competition but the landscape for direct agencies with new and existing lenders is changing .
Existing lenders are scaling back panels to fit in line with their realistic funding requirement and new ones are being more selective. Swift recently culled the majority of agencies but informed a selected panel of 16 brokers that they were to receive a limited tranche of money on a month by month basis. Welcome informed many smaller volume brokers that they would no longer be able to submit business directly and appear to only have a handful of key brokers handling fully packaged cases.
Prestige Finance stopped granting new agencies in March and informed selected brokers that agencies were being withdrawn . Paragon have been telling brokers that unless certain volume and performance criteria can be achieved then they can no longer deal direct.
New lender launches appear to be moving down the route of a soft launch with a restricted panel of known partners and these are then creating a pyramid system of ‘satellite packagers ‘ underneath them.
Although there has been some initial resistance from established brokers they have now reluctantly accepted that if they want access to the products they have to go through someone else .This model has now proved lenders can get distribution to all credit brokers simply , effectively and cheaply without the need for a large network, sales team or cost base.
Next set to launch is Link Lending , who have indicated it plans a similar strategy when it rolls out its second charge proposition in July. Others considering entering the market all seem to favour the ‘tried and trusted ‘ route through established connected and respected partners they can rely on to provide quality packaging to ensure that when a customers file arrives at the Lender it merely needs rubber stamping for approval and payout .
The credit crunch has already claimed many victims , with the likely hood of many more to follow and lenders will look closer at its partners track record, creditworthiness ,reputation and packaging quality as the consolidation of the loan sector continues throughout 2008. A lender agency used to be taken for granted but nowadays is seen as a powerful asset and marketing tool for those which have them.
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