View more on these topics

HBOS slip shows the client is king

Last week’s news that HBOS had lost market share was a timely reminder that irrespective of what lenders may like to think, the consumer is king. And the lending giant identified its retention strategy as the banana skin that caused the slip-up.

HBOS’ pre-close trading statement admitted that its pricing had been wide of the mark with the retention deals it had lined up to keep hold of customers coming to the end of their discount periods.

Consumers weren’t attracted to the deals and brokers also gave them a wide berth. This resulted in its market share plummeting from around the 15% to 20% mark to just 8%.

At a time when the industry faces radical chan-ges, from retention fees to factory gate pricing and trail commission, HBOS’ bad six months are a time-ly reminder of what can happen when firms try to force consumers down a particular route.

Take the mobile phone industry – it was initially blindsided by the widespread popularity of text messaging. Texts had only been included as an afterthought, but mobile phone users loved them. And after networks splurged piles of cash on expensive 3G contracts, they found consumers didn’t want the pricey video and picture messaging they were relying on to pay back the billions they had invested.

HBOS says it will regain its market share in the latter half of the year, and judging by its product range, this looks likely. Swap rate pricing is now factoring in another three interest rate rises at well over 6%. Despite this, BM Solutions and Halifax are both offering products below the 5.5% base rate.

To maintain their competitive edge, businesses must offer consumers what they want at the right price, not the other way round.

Speaking of demand, the secured loans industry is attracting consumers and brokers at breakneck speed. As a result, next week Centaur Media will publish Loan Distributor, edited by Natalie Martin. Make sure you check it out.

Recommended

A&L unveils latest products

Alliance & Leicester has unveiled its latest range of prime, self-cert, near-prime and buy-to-let mortgage deals. It includes a self-cert two-year fixed rate from 5.69% up to a maximum 85% LTV, an arrangement fee of £1,999 and an early repayment charge of 6% until August 31 2009.

Moneysupermarket.com seeks 25 more advisers

Moneysupermarket.com is on the hunt for staff in a bid to double its mortgage consultancy team. The price comparison website, which is rumoured to be on the verge of floatation, has 25 vacancies to fill with CeMap-qualified advisers. The vacancies include business-to-business roles in Mortgage 2000 and business-to-consumer roles as part of the customer assistance […]

Silent partner bought out

Moneysupermarket.com was launched in December 1999 by Simon Nixon and Duncan Cameron. Originally based in Chester, the price comparison website and its 400-odd staff now have a home in Ewloe, North Wales. Nixon recently bought out silent partner Cameron’s 48% stake.

Cattles enjoys loans bonanza

Sub-prime finance specialist Cattles has revealed strong growth for the first half of 2007 with trading above management expectations.In a pre-close trading statement on the London Stock Exchange today, the listed company says in the first five months of 2007 its sub-prime loans division Welcome saw a 51% rise in volumes on the previous year. […]

The savvy consumer

In last year’s FCA thematic review of the mortgage market, one of the key things highlighted was the “savvy consumer”. That’s the client who comes in the door with a very clear idea of what they need and expect you to get them it. They don’t think they need advice, they have after all consulted […]

Newsletter

News and expert analysis straight to your inbox

Sign up