The second day of the Secured Lending Summit in Jerez, got off to a topical start this morning with speakers debating the impact of regulation on the economics of the secured loans market.
Robert Sinclair, director of the Association of Finance Brokers, warns that the forthcoming changes to the Consumer Credit Act will squeeze the economics of the industry and rid the sector of those firms that aren’t doing things right.
Giving the broker’s perspective, Tim Wheeldon, managing director of Loanmakers, says it is a nervous time.
He adds: “From a broker’s perspective it is a nervous time, there are going to be changes to commissions and lenders are not giving serious indications as to what these are going to be.
“There will be a change in the look and feel of the industry, and there will be those that will not be efficient enough to cope.”
Also speaking at the seminar was Peter Tutton, social policy officer at the Citizens Advice, who admitted it is worried about aggressive arrears management and the number of borrowers being taken to court with just a couple of months arrears.
While Tim Henson, compliance and administration director at All Types of Mortgages, advised brokers that they need to make sure they have clear records so when they are challenged further down the line as to why they recommended a secure loan over a mortgage they have evidence.
There were also strong views regarding the selling of payment protection insurance.
Wheeldon believes the Financial Ombudsman Service will start to find firms that are selling PPI without recordings in place guilty of mis-selling and advised them to put measures in place.
There was a general feeling within the seminar that unless something was done to tackle the problems surrounding PPI it could bring the industry down.