Wrong to blame packagers for risky lending practices


I took exception to the letter in the August 16 issue of Mortgage Strategy titled ’Packagers played a part in creating the risky lending model’.

Not only does it blame packagers for higher risk lending but it also associated this with one of the industry’s most respected individuals, Savills Lending Solutions’ managing director Rob Jupp.

The letter was anonymous but I would put money on it being written by a broker, because a lender would not dare question packagers as it was lenders that set the criteria by which products were sold. And brokers were the ultimate source of packagers’ business in the first place.

Having worked with Jupp and others in the sector to establish a code of conduct, I am aware of the efforts made to ensure that this maligned sector established the credibility it deserved.

I took exception to last week’s star letter. There were wrongs but it’s not as the writer sees it and I’m sure I am not alone in my criticism

Small brokerages became packagers and fed off lenders, especially new entrants buying business and the subsequent greed for market share led to reputational issues.

Pre-credit crunch, packagers were brokers’ and lenders’ best friends. They offered distribution and generous proc fees. Many brokers, networks and lenders disappeared following the withdrawal of funding to specialist lending. Brokers were over-exposed and many had no back-up plan.

Networks were greedy too and exercised little control over compliance to protect consumers. Packagers offered a service to accommodate inadequacies of sourcing systems that were unable to accurately offer products based on the complex criteria of the specialist sector.

I am not saying there were no wrongs. It’s just not as the letter writer sees it and I’m sure I am not alone in my criticism of this letter.