Halifax's £245 fee for a new mortgage

The Halifax, Britain's biggest mortgage lender, is to introduce a £245 charge for new customers. Its so-called 'mortgage account fee' will apply even to those who choose to pay a higher interest rate to avoid arrangement fees.

The bank said the new fee will replace its previous £175 mortgage exit arrangement charge.

It scrapped the charge last July following pressure from the Financial Services Authority watchdog. Critics said the bank, owned by HBOS, is simply recouping lost revenue.

Louise Cuming, head of mortgages at moneysupermarket.com, said: 'HBOS has waited until the exit fees debate has died down before sneaking in a more expensive charge. I urge HBOS to scrap this decision.'

The FSA, which regulates banks, said the matter is not an issue for it.

A Halifax spokesman said the new fee is clear and upfront and replaces several charges.

'We are very late introducing it,' she added. 'The Abbey did it a year ago and is charging £350. Our single fee is less than the total of all the previous fees we have charged.'

www.thisismoney.co.uk

IMLA and the CML pair up on lender IT survey

The Council of Mortgage Lenders and the Intermediary Mortgage Lenders Association have teamed with Frank Eve Consulting to analyze how lenders and brokers use the internet to speed-up the lending process.

This year the study will focus on how lenders integrate their technologies into the broker point of sale systems and the priorities for lenders in terms of third-party integration.

It will also be extended to review broker point of sale systems, application processing systems and sourcing systems. The goal is to help lenders and brokers establish an overall e-commerce strategy and prioritize IT spending.

The study will define basic threshold requirements, best practice and emerging best practice in lender-broker technology.

Data collected will be used for the Mortgage Strategy Technology Service Awards to be presented at a presentation lunch in November.

Frank Eve, managing director of Frank Eve Consulting, says: “This year’s study will show how the mortgage e-commerce environment is adjusting to the effects and implications of the credit crunch. We will be evaluating Lender – Distributor connectivity and considering where lender strategies will lead the industry, with particular focus on how lenders are integrating with broker point of sale systems and trading platforms.”

Michael Coogan, director general of the CML, adds: “One year on, and the market environment is very different for lenders and brokers as we embark on this year’s benchmark study.

“But the application of information technology will continue to be important to our industry. We are therefore pleased once again to support the study, and look forward to seeing how IT innovation is helping lenders and intermediaries address the new challenges confronting the industry.”

GE Money finalises Polish bank deal

GE Money announced that it has closed the transaction to buy Poland’s BPH Bank, once the country’s third-largest, but now barely making it into the Top Ten there. In its glory days, BPH was the subsidiary of Germany’s HVB, and acquired a reputation for good customer service and fast growth. When Italy’s UniCredit bought HVB in 2005, BPH was partially merged with UniCredit’s Polish bank, Pekao, the country’s second-largest bank, taking the corporate banking, investment funds, stock broking divisions.

Having lost many of its best employees, large parts of its most lucrative businesses, and several hundred branches, BPH was still an attractive target for GE Money, which was looking to expand in the Polish market. GE Money paid about €625 million ($970 million) for BPH, not a lot for a Polish bank, and plans to invest an additional $50 million this year, with a total of $150 million to be invested over the next few years. Polish regulators approved the sale of BPH this month, and the two banks should merge next year. The new bank will be headed by Jozef Wancer, who originally helped build BPH into one of the country’s largest banks. A priority will be to re-establish the bank’s corporate banking. In December, BPH had no corporate customers, now it has 600, said Mr Wancer. By the end of the year, he hopes to double that. The goal is for the bank to climb back into Poland’s Top Five in five years.

The two banks’ strength is in consumer lending, where GE brings an aggressive approach to mortgage and consumer loans, while BPH has a national network, and a well-known brand. GE has a problem loan ratio of about 1.6 per cent, while BPH’s is a better-than-industry-average of 4 per cent.

“We are very bullish on the prospects of the Polish market,” said Dmitri Stockton, president and chief executive of GE Money in central and eastern Europe. “Our risk management capability is one of our strengths. It’s a key thing we have to offer.”

www.leasingworld.co.uk

TietoEnator slumps as bid talks end

Shares in Scandinavian IT services vendor TietoEnator slumped in morning trading after it said talks with potential suitors had ended without any firm offers.

TietoEnator's shares slipped 6.3%, or EUR0.88, to EUR13.03 in morning trading after the vendor released a statement saying it had ended discussions with "a number of strategic and financial parties" after they failed to result in "any firm and actionable offers".

TietoEnator has been talking to various parties since receiving an unsolicited EUR15 per share bid from private equity firm Nordic Capital in March. The offer period for Nordic Capital's bid - which the board urged shareholders to reject - lapsed on 26 May, after being put back three times.

But in the company statement, Anders Ullberg, chairman, TietoEnator, says: "Having evaluated these alternatives and the inherent nature of each potential offeror, and their value attributes, the board's unanimous view is that it has not received a firm and actionable offer that represents a fair value for shareholders and optionholders, and therefore all discussions between the company and potential offerors have come to an end."

Norwegian newspaper Dagens Naeringsliv reported today that TietoEnator's rival EDB Business Partner had decided not to make a bid after its partner, US private equity firm Blackstone, withdrew from the process. According to the report, without Blackstone EDB and fellow consortium member Telenor could not afford to beat Nordic Capital's earlier offer.

Ullberg says the vendor will now concentrate on the restructuring and cost cutting programme it embarked on in January, designed to generate annual savings of more than EUR100 million by the end of 2009.

The performance improvement programme, followed an 18-month run of volatile earnings at TietoEnator, which had mainly been caused by project over-runs in the company's banking and insurance and healthcare and welfare units. The vendor is also eliminating 800 jobs, mainly in Finland and Sweden.

TietoEnator slumps as Nordic Capital sells stake

Shares in Scandinavian IT services vendor TietoEnator have slumped on news that Nordic Capital's bid vehicle Cidron Services has sold off a 4.4% holding in its business.

TietoEnator shares closed 8.32% lower at EUR14.76 yesterday and continued to fall in morning trading after Cidron Services said it had sold a 4.4% shareholding at an average price of EUR16.50 per share. The stock was trading at EUR14.70 at lunchtime today.

Cidron is pursuing a hostile takeover bid of TietoEnator and launched a EUR15 per share, or EUR1.1 billion, offer for the vendor in April. Since then Cidron has pushed back the offer period for its bid three times. The offer period is now expected to end on 23 May.

According to press reports investors have been waiting to see if Cidron ups its offer for TietoEnator, but the move to sell the 4.4% stake implies the equity outfit is pulling back from the bid.

The TietoEnator board has repeatedly rejected the EUR15 per share offer. Furthermore, last week a group of shareholders that hold a combined 10.4% stake in TietoEnator said they will not accept the offer. This appears to have scuppered the Cidron deal which was dependant on holders of at least 90% of TietoEnator's shares accepting the deal.

In its latest statement TietoEnator has again repeated its rejection of the Cidron offer and says its board is "in active dialogue on, other alternatives to enhance shareholder value. The board will keep the market informed if a firm and actionable alternative for shareholders materialises that could bring more value for shareholders than TietoEnator's revised strategy," says the statement.

Reuters reported last week that Blackstone, Telenor and EDB Business Partner are in talks with TietoEnator about a white-knight bid. Citing "people close to the matter", the report said the consortium is considering a bid before merging the firm with EDB.

However a separate report by Reuters rules out CapGemini as a potential bidder for TietoEnator.

According to the report, Capgemini's CEO Paul Hermelin has stated that TietoEnator is too big for CapGemini to buy.

Faster payments service launching Tuesday 27th May

The final week of testing has been completed prior to the launch of the Faster Payments scheme and consumer advice has been issued.

The Faster Payments Service, which includes standing orders, is the banking industry’s response to Government concern that the UK did not have a low cost, quick and efficient electronic payment mechanism.

With just a few days to go until the launch of the new scheme, APACS, the UK payments association, has issued new materials to help customers wishing to benefit from the service, as it begins its rollout on 27th May.

APACS has produced a new, downloadable advice guide, How to use the Faster Payments Service, along with an online easy-to-use sort code checker www.canipayfaster.co.uk. Customers can input any UK sort code to check whether it is able to receive Faster Payments.

Paul Smee, APACS chief executive said: “The final part of this enormously complex project has been to test the new system in a live environment. This week hundreds of penny payments have successfully been made between the participating banks. The Service is now ready to start being rolled out to customers next Tuesday.

“Although the initial rollout will be gradual, and some customers may not be using the new service immediately, we expect that in the coming months this will ramp up to enable large numbers of customers to benefit from it. After such substantial investment by the industry we’d like, in time, to see the new Faster Payments Service being used for all of the UK’s internet, phone and standing order payments.”

Stephen Ley, a partner in Deloitte’s Enterprise Risk Services practice specialising in payments and retail banking said: “The Faster Payment system will be a challenge for banks which could lead to increased risk of fraud as it will be harder for banks to detect and block fraud in the time window available. The existing process relies, in part, on banks having sufficient time to detect suspicious transactions.

“A number of banks have opted to issue card readers which work with their customers’ debit card to create a more secure authentication and authorisation process. With over 20 million customers regularly using internet banking, increasing online safety is clearly a priority.”

When Faster Payments goes live transactions will be limited to £10,000 for immediate payments and £100,000 for standing orders, although some banks may choose lower limits. In time it is expected that these limits will be increased.

FRSGlobal to announce regulatory reporting solution with Temenos T24 at global client forum

FRSGlobal, the only global supplier of regulatory risk and compliance reporting, with coverage for over 30 countries, will announce the launch of its regulatory reporting solution integrated with Temenos T24 at the annual Temenos Client Forum in Rome.

Temenos, under the terms of the current agreement, plans to develop and maintain the product interface between its T24/Global application suite and FRSGlobal’s FinancialAnalytics regulatory reporting platform. The combined solution is available to international banks and financial institutions.

The annual Temenos Client Forum brings together clients, management, alliance and business partners, industry analysts, potential clients and other special guests from around the world. This year the event is being held at the Rome Marriott Park Hotel.

FRSGlobal provides 1500 financial organisations – including 41 of the top 50 global banking institutions – with enterprise risk and regulatory compliance reporting solutions that enable them to increase operational efficiency, reduce costs and mitigate risks.

Roy Barnes, Alliances Manager, FRSGlobal says “We continue to increase our market share amongst banks who are looking to improve their international reporting capability, which is becoming an even greater imperative in the current climate.

“We are particularly pleased to figure as a Referral Partner to Temenos, who are consolidating their position also as the leading supplier of core banking software solutions in several sectors of the banking industry. The partnership has been created to enhance the Temenos solution offering to banks in the tier one, multi-country market and is complimentary to their existing TFR regulatory reporting solution for the smaller institutions.”

Building societies look to online channel

Over half of the UK's building societies are planning to introduce an online savings channel in the next year in a bid to attract and maintain customers during the current economic gloom.

According to a survey of executives at building societies by Nordic IT services outfit TietoEnator, only a quarter of building societies questioned already offer online savings services, but around 55% of respondents are planning to introduce the channel within the next 12 months.

TietoEnator says this is in direct response to the key challenge that building societies are facing of securing funding by attracting and retaining savers. Over 87%of survey respondents said introducing an online savings channel is "important", with 26% stating it is "crucial".

Half of those questioned fear savers may move to other providers in order to take advantage of services such as online savings accounts.

Commenting on the findings, Adrian Coles, Director-General, Building Society Association, says: “Building societies have always been keen to innovate in order to deliver what their members want. Online savings are no different and I'm sure we will see substantial development over the next 12 months.”

Credit scores go online for free

Credit ratings for more than 1.5m companies in the UK are now freely available following the launch of an online reviews directory. BView, which has been live for a month, lists the details of more than 2.3m trading companies, including credit ratings, customer reviews and scores on quality of service and reliability.

Unlike opt-in business directories and review sites, companies cannot remove their profiles and the interactive nature of BView means that individuals can search through league tables of businesses ranked by their customers.

The credit information has been provided through credit reference agency Equifax and is updated every month, according to Brad Liebmann, founder and chairman of the web portal. He hopes the site will become the "Wikipedia" of commercial data, promoting good practice and exposing rogue traders. "We are taking information that is opaque and exposing it. This level of transparency is the only way forward for UK businesses," he said.

However, not everybody is convinced of the benefits with some observers saying it could do more harm than good. "The guise it is in at the moment, it’s dangerous," said Ron Bidwell, group credit manager for Bridisco. "A lot of the information from what I’ve seen looks really out of date, more than a month old, so you’ve got companies on there that are said to be financially stable when in reality they’re not."

He added that the accuracy of the information posted is questionable and could easily be skewed. "People are quicker to reprimand than praise so it is 20 times more likely you’ll get someone saying something bad than good," he said. "Also, who’s to stop me registering under 20 different names and slagging off all my competitors?"

Liebmann said it will only remove any reviews or comments that are obscene and malicious in intent but aims to mitigate against people trying to manipulate ratings by weighting the value and influence of reviewers. "We accept that not all businesses will like being up there and that we could either be loved or loathed," he said.

With businesses ranging from sole traders to limited companies, he added that the site will create a level playing field for everyone, regardless of how big or small the marketing budget is. Every business has a free profile but can take out a premium membership at £149 per annum for added benefits such as a web link and logo.

Professor Andrew Burke of Cranfield School of Management, whose area of expertise is small to medium sized enterprises, believes the portal will radically transform the dominant economic model. "The site encourages innovation as businesses now need to be more competitive and responsive to customer needs, thereby strengthening the UK economy," he said.

Recession is looming, admits IMF

2 April 2008

The International
Monetary Fund today raised the spectre of outright global recession, blaming the
worst financial crisis in the US since the Great Depression.

In a hugely
pessimistic internal document, the IMF cuts its forecast for global economic
growth in 2008 from the 4.1% it predicted in January to just 3.7%.

'The financial shock
that originated in the US subprime mortgage market in
August 2007 has spread quickly, and in unanticipated ways, to inflict extensive
damage on markets and institutions at the core of the financial system,' the
report says. 'The global expansion is losing momentum in the face of what has
become the largest financial crisis in the US since the Great Depression.'

The paper, obtained
by Bloomberg News at an event for Asian ministers and central bankers in
Vietnam, said there was a 25% chance global growth would drop to 3% or less this
year and next - a pace the IMF described as equivalent to a global recession.

Mortgage approvals fall 40 per cent, says BoE

Mortgage approvals
have dropped 40 per cent from a year ago, with lending now at its lowest level
for 13 years, according to stats from the Bank of England.

The number of loans
approved for house purchases fell to 73,000 in February, with remortgaging
falling to 111,000. Figures released by the BoE also show that equity withdrawal
is now at its lowest level for three years.

It says that equity
withdrawal in the last quarter of 2007 fell by 33 per cent compared to the
previous three months. It was down by nearly half on the same time the previous
year. Figures also show an increaser in total net lending to individuals in
February to £9.8bn, which was above the increase in January and the previous six
month average.

Liberal Democrat
Shadow Chancellor Vince Cable says: “It is becoming increasingly clear that the
downturn in the housing market is much more than just a blip. As the credit
crunch continues to restrict lending and with many people saddled with masses of
personal debt, a dramatic fall in mortgage approvals was
inevitable.”

He adds: “As house
prices continue to fall and mortgage costs rise, we are in real danger of
returning to the woes of the Tory recession with large numbers of families
suffering negative equity and repossession. The Government must act now to
prevent mass repossessions which will only worsen this housing
crash.”

Nationwide switches to SAP for Banking

The UK's Nationwide Building Society is migrating its banking, savings and mortgage operations to the SAP for Banking platform as part of a £300 million business transformation programme.

German vendor SAP says its technology will streamline core processes, reduce costs and improve turnaround and processing of applications and transactions.

The building society, working with technology partners Sap, IBM and Capgemini, will implement the technology in a phased programme, focusing initially on current accounts before moving on to savings, mortgages and branch systems.

The SAP platform will replace systems supplied by Unisys and Fujitsu. Darin Brumby, divisional director, business systems transformation, Nationwide, says Sap for Banking will provide the building society the flexibility to adapt and respond to unseen future changes and advancements in the industry.

"Not only will it enhance our speed to market with products, it will also improve the overall customer experience with the society while reducing costs," says Brumby. Thomas Balgheim, SVP, global banking line of business, SAP, adds: "SAP's banking specific solutions are built upon a flexible and scalable platform that provide the foundation for addressing the many challenges faced by financial services providers today, from increased competition and value adding customer services, to the demands of regulatory compliance and managing new growth opportunities."

The SAP deal is part of Nationwide's six year, £300 million, programme to revamp branches and improve Internet and telephone banking services, which began in 2004.

Small societies restrict lending

The turmoil in the financial markets has led several small building societies to restrict or even halt fresh mortgage lending.

The Bath and the Earl Shilton have withdrawn all their deals, except those at their standard variable rates. Three others - the Newbury, Melton Mowbray and the Tipton & Coseley - are only lending to local people.

All have been swamped by demand but have found funds hard to come by on the financial markets.

The Bath building society admitted it had temporarily run out of money to lend. "Wholesale money is difficult to get and we have come to a standstill at the moment," said a spokesman. "We are hoping it will just be for a month, but we have taken on so much [new business] we have just run out of money to lend at the moment."

The Tipton & Coseley said the fact it was still offering 95% mortgages meant it had been attracting interest from customers unable to obtain mortgages elsewhere. "We were getting a lot of calls from around the country and we wanted to make sure that people locally can get them," said the society's Chris Martin. "Lenders are withdrawing rates and increasing them and limiting the percentage they will lend on.

"We are a bit loath to do that and it is to make sure we don't have to that we are restricting borrowing to people in our area," he added.

he drying up of funds in the financial markets has already led to the crash of one of the country's biggest mortgage lenders, Northern Rock.

But the effects of the crisis are turning out to be more widespread. All lenders are now much more cautious about who they will lend to - both to their public customers and also to professional ones in the financial markets. That has led directly to the disappearance of mortgages worth more than 100% of a property's value. And some lenders are now reluctant to lend more than 90%.

The Council of Mortgage Lenders has already warned that the "mortgage tap" could be turned off this year. Lenders expected to fund a third of their lending by borrowing from other financial institutions on the financial markets, but this source of funds has now dried up.

The economics consultancy Capital Economics - which has long argued that the housing market in the UK was a bubble waiting to burst - warned that the drying up of funds might lead to a downward spiral of falling house prices this year.

Fixed rate mortgages 'are the key'

The Chancellor unveiled plans to persuade homebuyers to take out longer term fixed-rate mortgages and to help key workers on to the housing ladder.

Mr Darling thinks fixed rates lasting up to 25 years will bring stability to the housing market, and protect homeowners from the payment shock of seeing their interest rate suddenly shoot up.

He also launched two shared ownership schemes which would allow key workers such as nurses and teachers to pay for a mortgage, initially covering just half of the property value. They will be offered a low rate loan for the rest of the value until they can afford to buy a bigger share of their property. This is the latest version of a failed government scheme which helped only 451 people into new homes, at a cost of £350m.

However, this scheme will allow borrowers to shop around for the best deals, and should be simpler to arrange. In a further boost, these borrowers will not have to pay any stamp duty on their home until they own at least 80 per cent of it.

Normally buyers must pay 1% of the price on homes worth upwards of £125,000, 3% above £250,000, and 4% over £500,000. The Government is also desperate to encourage UK homeowners to take out longer-term fixed rates. Of the one million plus mortgages taken out in the UK last year, only three per cent were for fixed rates of ten years or longer.

This compares with around half of all mortgages taken out in the U.S. and France. The problem with the UK model is that when borrowers come to the end of their mortgage term payments can rise suddenly because interest rates have increased since they last took out a loan.

This is when homeowners can start falling behind with their monthly repayments and risk being repossessed. The Chancellor believes that if borrowers had fixed rates lasting ten, 20 and 25 years then families would have the security of knowing what their repayments would be.

Yesterday he set out proposals to encourage banks and building societies to pool data on how many borrowers repay their mortgages early and what charges they have to pay. He hopes that by looking at the example of long-term fixed rate mortgages in other countries the banks and building societies will be able to find a way to charge a smaller early repayment penalty.

British homeowners are not keen on long-term fixed rates because of the penalties for quitting.

BUDGET 2008

For example, a borrower with a long term fixed rate could pay an early repayment charge of as much as 7% of the amount they have left to repay - £9,100 on an average £130,000 mortgage.

David Hollingworth from brokers London & Country says: 'It is extremely difficult to plan for what is going to happen 25 years or even ten years down the line. Borrowers like the idea of long-term stability but don't want to be trapped for the long-term.'

Gravity packager software

The developer of packager software system Gravity is looking to set up a whole of market sourcing system to rival Mortgage Brain and Trigold.
Called Orbiter, it will offer sourcing, processing and online compliance services.

The system is being developed by software firm Oppono, creator of packager processing and sourcing system Gravity, which has been running for two years.

It plans to roll out a whole of market solution by the end of 2008, allowing it to offer what it calls a one-stop shop market proposition.

Bank of Scotland International selects BancTec Mortgage Origination solution

BancTec Ltd, a leading provider of transaction processing solutions to the banking and financial services marketplace today announced Bank of Scotland International has chosen its eFIRST Origin solution.

The BancTec solution, eFIRST Origin, will allow Bank of Scotland International to optimise the performance of its multi-currency mortgage application processing operations and significantly decrease the time it takes to process mortgage applications. The implementation of eFIRST Origin provides Bank of Scotland International with a fully integrated web-based solution that will manage applications for offshore mortgage products; from customer enquiry all the way to completion and drawdown.

James Gairdner, managing director, Bank of Scotland International said, "We look forward to working closely with BancTec to ensure customers continue to receive the high quality service they have come to expect from Bank of Scotland International."

James Silcock, business development director - EMEA at BancTec said, “We are pleased to have been selected by Bank of Scotland International to provide their next-generation mortgage system. This is the first time eFIRST Origin will be used within a multi-currency loans environment and we are looking forward to working closely with them to ensure all mortgage illustrations will be accurately generated, controlled and documented as part of Bank of Scotland International’s rigorous approach to compliance."

FSA fires out warning to advisers ahead of March TCF deadline

The FSA has sent out a warning to advisers ahead of its March Treating Customers Fairly deadline suggesting a third of firms have not got the correct systems in place to test TCF.

In its newsletter to financial advisers, sent out today, the FSA says between September and December 2007 it carried out visits to 50 adviser firms to review process for giving advice, including management information. A further 50 firms were mystery-shopped.

Although the visits are still being analysed, the FSA says around a third of firms were not actively analysing and using management information they had gathered to review their processes and test whether they were treating their customers fairly.

The newsletter says: “It was disappointing that, in spite of producing some form of MI including Key Performance Indicators, so many firms failed to consider these on an ongoing basis as part of their monitoring of advising practices. In addition many firms did not adequately consider findings from their review of customer files as part of their MI.”

The newsletter also highlights a recent review by the FSA into whether firms are doing enough to ensure appointed reps are treating their customers fairly.

It found a number of issues with the 35 firms who participated including firm’s own written procedures not being followed in practice, too much reliance placed on the remote checking of client files and poor progress with treating customers fairly.

The newsletter says: “Whilst the results for the financial adviser sample were somewhat better than the other sectors, there are over 1,300 ARs conducting business of behalf of small financial adviser firms. Firms need to ensure the ARs they recruit are fit and proper and that their customer facing staff have the necessary knowledge and competence to advise customers.”

Stroud & Swindon opens new contact centre

Stroud & Swindon
has officially opened its new contact centre in
Gloucestershire.

The contact centre
was officially opened by the Mayor of Gloucester Harjit Gill and the welcoming
speech was made by Stroud & Swindon chairman Laurence James. The contact
centre, which will initially house 40 Stroud & Swindon employees, has an
overall capacity of 110.

Fitted with state of
the art telephony systems, Stroud & Swindon claims the centre will offer an
even higher level of customer service.

Stroud & Swindon
contact centre manager Gina Pearce says: “We have been based in Gloucestershire
for over 150 years and it was imperative to us that our new offices remained in
the area, as opposed to moving elsewhere in the UK or even abroad as other
institutions have done.

“Stroud &
Swindon is a committed employer in the local community, and considers
Gloucestershire and the Southwest its heartland. The new contact centre not only
allows us to provide a better service to our customers, it also gives us room
for expansion.”

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Debt consolidation may be anti-TCF

Financial advisers
should think twice before suggesting consolidation to indebted clients, a debt
mangement advisor has warned. TCF Debt Solutions says that unless advisors
include alternatives to consolidation in their advice to clients with debt
problems, such as individual voluntary arrangements or wider debt management
solutions, they may fall foul of the Financial Services Authority's Treating
Customers Fairly regulations.

Andy Moody, chairman
of TCF Debt Solutions, says: “We need to move beyond a consolidation mentality
as advisers.

“Consolidation has
helped many customers but for a lot of clients it can be argued that taking on
more debt is just forestalling an inevitable move into greater problems that can
lead to bankruptcy."

He adds: "The
question will then be whether the intermediary assessed the client correctly at
the outset, and the FSA will expect to see that in keeping with treating
customers fairly the client was fully aware of all the
options.”

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Prime lending is dominant in UK, says IMLA

Prime lending continues to dominate the UK mortgage market, says the Intermediary Mortgage Lenders Association. Despite prevalent fears over sub-prime lending in the US and at home, IMLA says prime and self-cert residential lending remain the majority.

It says this applies to loans generated both via the intermediary sector and direct to consumer.

IMLA says it has collated estimates of 2007 mortgage volumes split between direct and intermediary business. Its research shows specialist lending represents 30% of all lending and that the intermediary sector handles more than 90% of specialist business.

Peter Williams, executive director of IMLA, says: “Specialist, intermediary lenders are often associated with sub-prime, buy-to-let and other forms of specialist lending. “But we mustn’t overlook the fact that significantly more prime business is handled through intermediaries than direct - £140bn for intermediaries compared with £115bn direct.” He adds: “Even so, non-conforming business does represent around 30% of the whole market and as much as 40% of intermediary business.”

Williams believes it is important to recognise that non-conforming lending is not all sub-prime.

IMLA’s research shows the market share of self-cert and sub-prime activity declined slightly last year, while equity release remained a very small proportion of the market at well under 1%.

The association says UK sub-prime lending represents 6% of the market, as opposed to 20% in the US. Williams adds: “Intermediaries handled in excess of £230 billion in 2007, according to our calculations.

“Even in a slower market, based on projections for the size of the market in 2008, they will still be looking at substantial levels of activity in the current year.”

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