The necessary evolution of packagers

The arrival of statutory mortgage regulation heralded the beginning of industry-wide predictions that packagers were eventually going to be a thing of the past. As I have written before, this has proved not to be the case. Many packagers, including us, have continued to be in demand and almost a necessity with our brokers.

In fact, in recent research it was ascertained that 90% of brokers turn to packagers when placing a sub-prime mortgage product rather than going direct to lenders.

This enforces my view that packagers are not facing death row and that the development of packagers as a market has just begun. Some packagers have reinvented themselves and some have carried on as normal, but the fact remains they are still required in this industry.

With regulation being the in word, it seems obvious that people will now cry for packagers to also follow this route. The Financial Services Authority has conducted countless meetings regarding this, but I would question whether the regulator really understands the business of sub-prime mortgages.

I was delighted to hear that the Association of Intermediaries is hosting a packager forum in a few weeks so that the unified voice of packagers can be heard. This is of vital importance to the industry and I am pleased that AMI director-general Chris Cummings understands this.

I am understandably sceptical as to how regulation will affect my business and that of other packagers. That said, I’m open to the recommendations from the FSA regarding this, and providing it has listened to us and has a thorough understanding of how packagers work, its recommendations will have to inevitably be adhered to.

But until the research and findings showing that the regulation of packagers would add value has been published, I am going to continue to allow my business to provide my lenders with distribution, my brokers with a good service and excellent products, and their customers with products that will be seen to treat them fairly. This is what good quality packagers do, regardless of regulation.

If the day dawns when regulation is a necessity, then all packagers will adjust, just as they have had to over the past couple of years when everyone predicted that their demise was inevitable.