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Is michael bolton right to say packagers are the clear losers since mortgage regulation?

Many packagers have adapted well to the regulated world and are prospering by adding value for lenders and brokers, say our experts

Peter Beaumont is deputy chief executiveof Mortgages PLC
A big mistake when it comes to analysing the packaging industry is to assume it is a homogenous group of companies. It is anything but.

Packagers, like mortgage lenders, come in a variety of shapes and sizes. Some are large, well established and successful, others are small, new and unproven. Some are innovative and profitable and others are struggling.

So to say all packagers are losers since regulation is not true. A considered analysis of the facts shows that a surprisingly large number of packagers have put business strategies in place which have successfully taken them to the next phase of their development.

Many packagers recognised they had no automatic right to survival after Mortgage Day. They understood the need to invest in technology, staff, training and processes. They have used technology to drive down costs, boost efficiency and provide consistently high quality service.

Packagers have been able to add value by generating substantial volumes of high quality business for lenders, while providing brokers with more choice, enhanced deals and time savings. For example, some packagers are now able to provide online aggregated decisions in principle for brokers, saving them the trouble of making multiple applications for clients.

Larger packagers are generating billions of pounds of new business each year, employing hundreds of staff and investing tens of thousands of pounds in technology and infrastructure. Most importantly, they are profitable. Some have chosen to become lenders in their own right. Who would have thought that just a couple of years ago?

The success of larger packagers is not necessarily mirrored throughout the sector. But name an industry – mortgage lending included – where that is the case.

Jon O’brien is operations director of the Professional Mortgage Packagers Alliance
It is astonishing to me that Michael Bolton continues to voice an opinion on the market which shows his grasp of mortgage distribution is tenuous at best. I don’t know why he finds it necessary to attack a distribution sector that handles 30% of the industry’s turnover. Now, having run out of sensible things to say he is resorting to nonsense.

His first misconception is that packagers give advice. Packagers do not give advice and most have systems in place to make sure that everyone they deal with is clear that they are not advising but setting out a selection of choices that fit applicants’ criteria.

Second, the vast majority of packagers are authorised by the Financial Services Authority for the parts of their trading activities that are regulated, and they run their businesses in compliance with the FSA’s principles and rules. They have nothing to fear from regulation and are trading happily within the regulated regime.

Third, if there are any networks whose members are seeking advice from packagers, those networks need to get a training and competence regime organised that puts a stop to this immediately. Principals are responsible for the compliance of their appointed representatives and nobody else.

With regard to Bolton mentioning Personal Touch Insurance being concerned and asking for the audited accounts of its packagers, this is normal business practice when entering into business alliances such as the network/packager relationship. At the Professional Mortgage Packagers Alliance we vet the accounts of prospective members, so any networks looking for packagers know where to come.

If Bolton’s predictions had any weight packagers would have disappeared by now, but the sector is alive, well and prospering. It’s time he moved on to a more credible topic.


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