Pink Home Loans breached FSA capital requirements in 2009

1 October 2010 | By Natalie Thomas

In February 2010 it issued preference share capital of £600,000 to meet the regulated capital requirements.

The 2009 accounts for the network, which is owned by Skipton Building Society, show the shortfall on its capital requirements was principally down to an impairment of £1.4m the company made against its subsidiary BDS Mortgage Group, which it acquired in 2008.

In the directors’ report, it says: “As at December 31 2009 the company had breached its regulated capital requirement levels, principally as a result of providing impairment against its holding in its subsidiary undertakings.

“The company issued further share capital in February 2010 and forecasts show that the company will be in excess of its regulatory capital threshold for the foreseeable future. The directors have therefore prepared these accounts on a going concern basis.”

The accounts say Skipton will continue to provide financial support to the network.

The network made a loss of £3.2m before tax in 2009, a slight improvement on last year’s £3.3m loss.

Over the period appointed representative productivity at Pink was low in terms of mortgage sales and cross-sales of protection and general insurance, and as a result the business continued to reduce costs.

The accounts add: “Despite the turbulent market and having lost 173 advisers, the company was successful in attracting a further 212 advisers to the network during the year, a net increase of 39.”

The network will further develop its directly authorised proposition this year, with the emphasis on attracting VIP accounts.

David Copland, managing director of Pink Home Loans, says: “The outlook for 2010 is a lot better. We had the £1.4m impairment against BDS and there were a lot of redundancy costs involved with BDS, which suffered when the packager market disappeared.

“We have reduced our costs in line with our income and we are lucky that Skipton has been very supportive and that has put us in a much stronger position. We have maintained our AR numbers and we are back on budget.”

Copland could not comment as to whether the network is in talks to be acquired.

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