60 Seconds with Peter Beaumont
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When did you start to look at the sale-and-rent-back sector?
I was deputy chief executive officer at Mortgages PLC and when that came to an end MPLC CEO Trevor Pothecary and I started to look at other options. At first we didn’t like the market - we knew that there was going to be a growing need for the product but didn’t like the way it was being done.
what changed your mind?
We spent months researching the market ourselves then took on David Newman, former managing director of Victoria Mortgages, as a consultant. Newman, now a shareholder in the business, did the bulk of the research into the market, how it was working and what he didn’t like about it. We did a lot of cold calling pretending to be customers and what we found was pretty horrible.
The problem was that those operating in the sector were opportunistic and predatory in their approach. We wanted a product that would be workable and scalable and realised that we could turn all the negatives we had noticed into positives.
Did the collapse of the banking system hinder your progress?
The way the market was falling apart, we knew there was going to be a big problem and that we would have to aim even higher. We realised we needed to raise funds to scale up our idea and started talking to hedge funds, private equity houses and institutional investors. We had a lot of interest during the lead-up to the banking crisis and then lost a few would-be interested parties for obvious reasons. We ended up choosing US hedge fund Elliot Group last December and finally got funding through on February 12.
How will regulation affect the sector?
The interim authorised regime took effect from July 1 so as long as firms have submitted or intend to submit their applications by the end of the month they are deemed authorised. If they have not submitted their applications by August 1 firms have to cease trading and then the Financial Services Authority has three months to grant the permissions applied for.
How many providers are in the market and will the number decline after regulation?
Nobody knows the number of providers and I don’t know how many firms have applied for authorisation or will do so by the end of the month. I imagine that by the end of the month only a few companies will have applied to be providers - maybe less than a dozen.
