Entrants can’t shake HBOS dominance

Unless you\'ve been asleep or out of the country for the past few months, you\'ll have heard of Michael Bolton\'s new lender edeus. While there\'s been loads of hype surrounding its launch next month, what has taken me by surprise is the rumour that it is to unveil an amazing 650 products.

It’s good to give consumers choice but how can one lender come out with so many products? It begs the question of whether this is overkill in terms of product options and whether edeus is biting off more than it can chew.

How many products can the market cope with and how are brokers expected to keep on top of the options available when 650 new products hit the market in one day? Perhaps edeus is hoping that if it overwhelms advisers with its products they’ll take the easy option and recommend one of its deals rather than a competitor’s.

But is this treating customers fairly? Consumers are confused enough about financial products – including mortgages – as it is without hundreds more appearing. And I find it hard to spot 650 gaps in the market that edeus can fill.

It could also cause problems for the sourcing systems which already struggle to update when products are launched or details changed. And surely the regulatory burden on edeus will be huge if it has to produce compliant Key Facts Illustrations for 650 products.

While edeus is arguably the highest profile new lender, several others have recently entered the market and more are on the way. Last year we welcomed Victoria Mortgages and more recently we have seen Bill Dudgeon and Co deserting The Mortgage Business to launch DB Mortgages.

But despite all these new lenders and products, HBOS still dominates the market and has not seen its share of business fall. It makes you wonder how competitive the new lenders really are if they haven’t even managed to dent HBOS’ dominance.

If bodies like Which? start to worry about there being too many products lenders could end up facing a regulatory probe.

I suppose the big winners in all of this will be the consumer search engines such as money-supermarket.com and new kid on the block, Jim Spowart’s peopleschampion.com. Bizarrely, these rivals are powered by the same technology which makes you wonder about their value and how independent they are.

And peopleschampion.com apparently plans to launch its own products. It will be interesting to see if these always come top of relevant searches on the website.

Finally, by the time you read this I’ll hopefully have survived my first day in my new job as personal finance editor of The Scotsman – wish me luck.