Q: How is Freedom Finance structured?
A: Freedom Finance was established in 1983 as Wilmslow Financial Services. Freedom markets a range of secured and unsecured personal loans, first mortgages and remortgages through national advertising, direct mail, intermediaries and outbound telesales activities.
In 2000 JZ International, a leading venture capital company, took a 55% shareholding in the business. It was at this time that we took the decision to rebrand and we changed the company name to Freedom Finance.
Rupert Webb, our founder and group managing director, along with the rest of Freedom's management team, retained a 45% stake in the business.
Q: How is Freedom Finance positioned within the intermediary mortgage market and what lenders do you deal with?
A: Freedom Finance Mortgages & Loans (a wholly-owned subsidiary of Freedom Finance) currently operates as a packager serving the intermediary sector. Mortgage applications are also referred from the personal loans side of the business if a mortgage is deemed to be a suitable solution to the customer's needs.
Mortgage lending partners include organisations such as Mortgage Express, The Mortgage Business, Mortgages PLC, First National including First National Mortgage Company, Platform Home Loans, Kensington Mortgages and igroup.
Q: What area of the market does Freedom Finance specialise in?
A: We cover the whole mortgage market, including prime, niche and sub-prime lending. However, the majority of applications are for either niche or sub-prime loans.
Q: How will Colin Snowdon's recent appointment affect how Freedom operates?
A: We have recently announced the appointment of Colin Snowdon as managing director of Freedom Finance Mortgages and Loans and when he joins in January 2003, he will be developing a strategy to enable the business to play a more fundamental role in the UK mortgage market in the future.
We should point out that Colin Snowdon was the mastermind behind the launch and development of both The Mortgage Business and Verso. It's on this basis that we have no doubt he will be bringing with him a wealth of intermediary lending experience.
Q: What share of that market does Freedom Finance currently have?
A: We plan to significantly increase our market share during 2003. We have an open mind about how best to do that and we are looking forward to Colin joining us to help us formulate our business strategy.
Our shareholder, JZ International, is keen to see Freedom expand its operations in first-charge mortgage lending, which is a logical extension to our consumer loans business.
Q: What incentives are offered to intermediaries?
A: Freedom Finance pays competitive procuration fees to brokers and also prides itself on offering a high quality service.
There has been much comment this year about the ways in which some financial institutions have let service standards slip as volumes of new business have increased and we have worked hard to avoid these pitfalls. We also have a team of CeMAP-qualified advisers who are well placed to support those brokers not qualified after December 31 on an introductory basis.
Q: Who do you consider your main rivals in the mortgage marketplace?
A: At the moment the answer is other packagers, but that will change during 2003 as we unveil our new strategy. There is no doubt that in 12 months time Freedom Finance will be a very different type of business in the UK mortgage market.
Q: What effect do you think regulation will have, particularly on future of the second charge market?
A: At the moment, the second charge market is regulated by the Consumer Credit Act and second charge lending has not been included within proposals for regulation of the mortgage market, which will come into effect in 2004.
However, the Treasury is aware of this situation and appears determined that nothing should slip through the regulatory net.
We have seen mortgage advice, originally excluded, becoming encompassed within regulatory proposals, and it would not be surprising if the Treasury takes another look at second charges. Time will tell.
Q: What was your reaction to the Treasury's decision not to regulate second charge loans?
A: We were not surprised. What the Treasury appeared to have in mind was regulation of mortgage lending and there were a number of notable omissions in its proposals, including mortgage advice and buy-to-let mortgages. Our lack of surprise should not be interpreted as criticism of the Treasury. On one hand, it is logical that second charge loans should be included so that regulation is all encompassing and offers consumers the protection they deserve.
But on the other hand, it should be remembered that second charge lending is not a major problem area. The Treasury has said: “We are not aware of any instances where a house has been lost because of default on a second charge.”
There is, therefore, an argument that says if a problem doesn't exist, why introduce regulation?
Q: What was your reaction to the Treasury's decision to regulate mortgage advice?
A: It had to happen – it would have been nonsense for mortgage lending to be regulated, but for the provision of mortgage advice to be excluded.
Sensible regulation is in the best interests of lenders, intermediaries and borrowers but, as with all legislation, the devil is in the detail and to be effective it must be clear and easy for all to understand.
We hope the Treasury has truly learned lessons from the implementation of the Financial Services Act so that regulations will be proportionate and realistic.
Q: Do you support efforts for a trade body for mortgage intermediaries?
A: Trade bodies are a good idea but they must be truly representative of their membership. Mortgage advisers have for too long been the silent majority in the mortgage market and they need to make their voices heard. I think the CML is a good example of an effective trade body for lenders. Intermediaries need an equivalent organisation which can campaign on relevant issues on their behalf.
Freedom Finance underwent major restructuring earlier this year to enable the business to expand its operations both within the UK and Europe.
In July, Freedom opened a lone brokerage business in Spain (the first of its type) and is considering expansion into other European countries.
Freedom Finance is based in Wilmslow, Cheshire. Its head office (pictured above) is home to some 300 staff.