When somebody writes a book on the history of the secured loan market, 2008 will go down as one of the most shattering years on record for the industry.
Lenders and brokers have been forced to fight for survival with may having to bid farewell to their colleagues in the heat of the battle.
The landscape of the secured loan market has changed dramatically in the past twelve months and many in the industry are still nursing the wounds from the years inflictions.
As the year started to unfold nobody could have foretold what was about to descend on the market in 2008 and if they had known many would have wished they could have stayed in 2007.
The year started off much in the same way that it would continue, with somebody getting fined for the selling of payment protection insurance, on this occasion it was the turn of HFC Bank .
The firm, part of banking giant HSBC sold PPI with 75% of the loans it provided and traded under the names Household Bank and Beneficial Finance.
The FSA found its 136-branch loan network did not require its brokers to gather significant information from clients with regard to their circumstances and suitability between January 2005 and May 2007.
Although not directly linked to the broker market the fine did little for the reputation of the market.
Emotions continued to run high all year around the debate surrounding the selling of PPI, prompting Robert Sinclair from the Association of Finance Brokers in January to call for the resignation of everyone that had sat on the Finance Industry Standards Association board over the last four years because of the situation the market has got itself into.
While in April Norton Broker Services revealed its plans to create a secured loan packager network and bought the rights to the client base of the Loan Directory Network to help in its grand plan.
April also saw the first signs of lenders starting to cut their distribution and introduce quotas. Swift was one of the first lenders back in 2008 to introduce quotas for business and announced it would no longer be accepting business from new brokers.
This move was later followed by other lenders including Prestige Finance.
The Finance and Leasing Association decided to take lenders matters into its own hands in May and set up a focus group for secured loan lenders, calling into question again the roles of the various trade organisations in the secured market.
As the year went on it became clear the credit crisis had well and truly dug its claws into the secured loan market and firms started to make redundancies across the board and cut down their distribution.
Loanmakers entered into troubled water in June when its operating board resigned, including Tim Wheeldon, managing director of Loanmakers and chief executive, Kevin Hindley.
Endeavour Personal Finance, the intermediary secured loan lender, part of the HSBC Group decided it was time to close its doors in June and was hotly followed on its heels by FirstPlus.
News of FirstPlus exiting the market in July rocked the market and was not helped by the revelation that the lender would be clawing back commission on PPI sales that didn’t go through from August 2007 to January 2008.
The first bit of hope in 2008 did not come until the summer when Link Lending descended into the market in August.
The short term lender launched its secured loan products via a limited panel of distributors through Link Loans.
Link Loans went to the market with rates starting from 12.4%, and with LTVs up to 80%.
Andy Moody’s decision in August to put Loanoptions.co.uk into administration and launch Loan Options had the industry divided.
Many thought that he should have thrown in the towel and called it a day, while others thought that resurrecting the business was the right thing to do for the industry.
August also saw Barney Drake, commercial director at y3s appointed to the board of the Association of Finance Brokers along with Paul Carley of First Choice Finance who was re-elected to cover small firms, with Darke covering medium size firms.
In September the industry’s attentions were turned to the AFB’s White Paper into the future regulation of secured loans.
The AFB received both praise and criticism for compiling the paper. Fiona Hoyle, head of consumer finance at the Finance & Leasing Association thought in the current climate the focus should not be on regulatory change but providing particular assistance to customers in financial difficulties via industry best practice.
Robert Sinclair, director of the AFB stood his ground and explained how it was vital for the industry to take a pro-active approach to regulation to ensure the survival of the industry.
The industry was hit hard in October by the news that Loans.co.uk was shutting its doors, resulting in the loss of 276 jobs.
The Watford based secured loan broker blamed the current economic environment for its failure and the withdrawal of a number of secured loan lenders.
There was some good news in October though with the return of the ex-Loanmakers quartet in the shape of Fluent Money. Hindley and Wheeldon launched the firm working alongside ex-Loanmakers colleagues Paul Ford and Simon Moore.
The internet brokerage was built around the same technology as Loanmakers and brought a glimmer if hope to the ailing market.
November was filled with more departures from the market with Richard Beaumont, managing director of Freedom Finance quitting the firm.
Nick Chadbourne, operations director of Freedom will now take over the role of MD.
As the credit crunch intensified White Label Loans offered little comfort in November when it announced it was withdrawing from the market for the foreseeable future.
The withdrawal of the lender was a bolt out of the blue for many brokers. The sector is holding its breath to see whether White Label will be able to find funding again in 2009 and re-enter the market.
There was some good and bad news from GE Money Home Lending in November. The lender announced that it was cutting its distribution down to around 150 broker and packagers in the first and second charge mortgage market.
Although the changes cut many distributors out of the market many were just pleased that the lender was not exiting the market completely.
Looking back at 2008 lenders and brokers in the secured
loan market will be hoping the new year manages to bring some good news as well.