60 seconds with.....Michael Coogan
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What do you make of plans to break up the Royal Bank of Scotland and Lloyds banking group, and the creation of three new banks?
More than 75% of gross lending in 2008 was by just six lenders and the concentration of new lending is also a big feature of the market. The building society sector is shrinking by the month and wholesale-funded specialist lenders are largely closed for business. That’s not a sustainable, competitive market. So competition from new entrants or hived-off entities is welcome as long as taxpayers are protected. More funding would satisfy pent-up demand. And together with Bank of China (UK), a few new members for the CML can’t be bad either.
Your submission on the mortgage market review seemed broker-friendly. Was this an olive branch following your comments earlier in the year?
What I said in the spring supported good brokers and Financial Services Authority action against bad ones. Some of the review’s measures could be helpful in this regard but the cumulative impact could undermine consumers, brokers and choice. Some market practices need to change but we don’t need blunt instruments that are out of proportion with the problem.
If you could have one wish with regard to the MMR what would it be?
Let’s take time to get it right. And let’s avoid the risk of separate regulatory intervention targeted at societies.
Can you see specialist lenders returning?
If you mean wholesale-funded ones it depends on investor appetite, capital backing for non-banks in the future and how many can survive long enough to reopen. Recent capital market deals by big institutions will not make much difference to specialist lenders in the next 12 months. But consumers have suffered, particularly in the buy-to-let and equity release markets.
How important will brokers be in future?
They will be crucial as a source of independent advice and in areas where it is complicated to get loans on the right terms. But there could be a significant shift between direct and broker business as the market evolves, partly depending on lenders’ willingness to grow their direct distribution.
How do you propose members square the circle on dual pricing?
The pendulum has swung in this rationed funding environment. Lenders have to be free to take commercial decisions at different points in the economic cycle.
