Q: How is loans.co.uk structured?
A: Loans.co.uk lends through a panel, the members of which we have formed strong partnerships with over the past few years.
Among these companies are igroup, First National and FirstPlus. All of our staff are located at our Watford HQ, where they are heavily involved in underwriting and the processing of applications.
Our senior management team consists of David Cowham, who is our chief executive, our managing director Steve Heyes; our strategic planning director Andy Pelley and Mike Brooks, our finance director.
At the moment we operate as a dedicated secured loans company. However, we have ambitious plans for the future, which will hopefully involve us working in other segments of the mortgage market and the wider financial services markets in general.Naturally, this will mean that we will be dealing with far more intermediaries than we do at the present time.
Q: What is the loans.co.uk approach to secured lending in the UK?
A: At the forefront of our thinking at all times is delivering the best deal that we possibly can to the consumer.
Therefore, transparency is as important to us as it is to the borrower. So too is the speed of service that our staff offers and the overall professionalism with which we conduct our business on a day-to-day basis.
Also important to us is our integrity and the quality of the secured loan deal that we are able to organise for the client.
This may sound like we are saying nothing new but, in our experience, not everyone adheres to what we believe are fundamental business principles.
Q: Who would loans.co.uk count to be among its rivals in the marketplace?
A: Typically we are competing against all of those companies that are able to attract volume business.
So we're talking of the likes of Freedom Finance, Purple Loans, Norton Finance and Ocean Finance. In our experience these tend to be the companies whose names crop up most.
However, as the secured loans market becomes increasingly diverse, we are certain that other organisations will emerge as major players in their own right. It's a case of watch this space.
Q: What impact is the internet having on the second charge sector?
A: The internet is an important part of the overall sales mix – but it is having far less of an impact than people might imagine. It's a good marketing tool that enables consumers to find out what secured loan and personal loan deals are available. They are also able to compare interest rates on a lender-to-lender and broker-to -broker basis. But consumers are wary of using the internet to apply for finance, and they still prefer the tried and tested method of submitting a formal application through the post. Many people also still prefer talking to a staff member over the telephone rather than communicating online.
That's now. Looking ahead, we're confident that things will change. In the US, the internet is making more of an impact as new methods pay dividends. These tactics will be exported to the UK and will lead to greater online penetration – eventually.
Q: How do you think the secured loan industry will change over the next two years?
A: There have already been massive changes taking place in the industry in recent months. The quality of the products that are available is the best it has ever been and the stigma that was once attached to a secured loan has now disappeared, as consumers realise that using the equity in your home is an essential tool for living, the way society operates today.
However, looking ahead, the biggest change is likely to be more competitive interest rates as greater competition between lenders and brokers works its way through to the consumer.
Come 2003, we think it's likely that we will see an explosion in the number of people offering secured loans to consumers, as thousands of advisers leave first charge loans behind and concentrate on working the unregulated markets. We are certainly facing some interesting times as we move towards Mortgage Day and 2004.
Q: Do the OFT and the Finance Industry Standards Association act as effective regulators?
A: Yes – although there have certainly been historic issues for both bodies in terms of the resources that they have available. FISA and the OFT are short of manpower in key specialist areas – although both complement each other. By this we mean that FISA is extremely proactive on compliance matters whereas the OFT is able to step in and take action once a complaint has been levelled. If a mistake has been made in recent years, it is in relation to the granting of Consumer Credit Licenses. Far too many have been issued by the OFT, thereby causing problems with policing the Consumer Credit Act. It is our view that FISA should ensure that those lenders subscribing to the organisation's Code of Practice do not deal with brokers who are not FISA-registered. In addition, we hope that in the future, FISA will be able to bring pressure on the OFT and the DTI to ensure that intermediaries are unable to obtain a Consumer Credit Licence unless they belong to the trade body. Such a position, if it is attained, will be good for all parties who are committed to ethical lending.
Q: Do you support a trade association for all intermediaries?
A: Yes. An effective trade association is vital to the overall interests of the mortgage and secured loans sectors. loans.co.uk has been a supporter of the National Association of Mortgage Brokers and Advisers (NAMBA). We supported NAMBA because we believe it is important that a series of benchmark standards be set for intermediaries. A trade association, we feel, is one way of delivering this. We also feel that the intermediary sector has lacked a clear and consistent voice when it has been invited to comment on issues such as CP146. Again, a trade association would champion the cause of the broker and adviser and ensure that the thousands of people who are involved in the selling of mortgages and secured loans at last have a voice that is heard and listened to.
Q: Is there a future for the Mortgage Code?
A: Absolutely – but it will undoubtedly need to evolve as the industry evolves to ensure that it remains a relevant document. It's difficult to know whether the organisation that supports the Code – the Mortgage Code Compliance Board – has a long-term future as, once the FSA gets hold of the industry, it would seem unlikely that there would be a role for a self-regulatory body.
Time will just have to tell in this regard, but nonetheless, our view is that the Code does have a future.
Loans.co.uk is a major player in the UK's secured loan industry. Founded by David Cowham and Steve Hayes only five years ago, the Watford-based intermediary now employs more than 300 people and attracts annual applications for finance from over 100,000 consumers throughout the UK. The company is ambitious and is actively looking to develop a presence in other sections of the financial services market. Loans.co.uk is a strong supporter of statutory regulation for all corners of the financial services sector.