CML says technology poses threat to packagers’ role

The Council of Mortgage Lenders has warned that electronic packaging could pose a threat to packagers and that they must embrace technology to survive.

The CML says that in addition to regulation, technology and online applications that simplify and speed up the process for brokers threaten the added value packagers have always been able to offer.

Despite the electronic threat, the CML believes the end is not necessarily nigh for packagers.

Christopher Dean, spokesman for the CML, says: “Automated systems are often not sufficiently flexible to take account of the individual circumstances of borrowers, which is where packagers’ manual underwriting skills come in.”

John Rice, managing director of the Regulatory Alliance of Mortgage Packagers, agrees that lenders taking their technology direct to brokers is a short-term concern for the sector.

But he adds: “Sending business to just one lender is not good practice as there is no guarantee clients will get the best deals. Through packagers, brokers receive a choice of lenders and the vast majority of brokers realise that best advice lies with packagers.”

The CML also says that if packagers continue to invest in technology there is no reason they should not improve their efficiency and play an even greater role in the industry.

Enterprise Group recently launched its EDGE system with a promise that it would provide speed and regulatory safety for users.

Michael Clapper, chief executive officer of Enterprise, says: “There will always be a place for manual applications but this will be on a much decreased scale. Technology will increasingly allow brokers to search for sub-prime products from a variety of lenders.”

The EDGE system has been criticised by some packagers for casting them in a poor light with its claim to be the “only packager in the marketplace who offers safe, accurate, ranked solutions in just minutes”.

But Clapper says: “I expected that we would get our competitors’ backs up with this launch but if anyone can show me a system as fast or as accurate as ours I’ll take those words back.”