Mortgage lending is still Virgin territory

25 January 2010

Virgin has long held aspirations to become a major player in the banking sector, so it was perhaps no great surprise to hear of its acquisition of the private bank Church House Trust.

The Financial Services Authority approved the move, giving Virgin the platform to venture into deposits and mortgages to grow the business.

The industry is in dire need of competition and innovation, and this could be the catalyst for a sorely needed shake up.

If Virgin gets it right it has the opportunity to learn from others’ mistakes and could force some lenders to raise their game.

My company is all about introducing clarity and simplicity to the mortgage process, so I welcome the Virgin brand.

Virgin tends to build its business by entering areas where consumers have felt short-changed on products or service, and aims to bring simplicity to UK banking.

But the company has a long way to go before it can be considered a credible player in the mortgage market. It has to overcome the hurdle of finding enough of the right people - an obstacle too big for Northern Rock, Bradford & Bingley, HBOS and Alliance & Leicester, despite their experience.

Virgin offers savings, credit cards and investment products to around 2.5 million customers, but it will have to pull some rabbits out the hat to attract enough funds from retail depositors’ so it can lend to home buyers - the regulator has yet to be satisfied.

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