Packager associations have been as much a part of a packager’s life over the past few years as tea is to the British.
But the strain is being felt in the market and doubts have been raised as to what the future now holds for the associations and whether they have one.
The value of any alliance, or indeed a network is to offer its members something that they would not be able to achieve on their own.
Packager associations in the past have used their joint muscle to negotiate better products, service and fees for their members.
It was thought that smaller packagers were unable to compete with the pulling power of the larger organisations and therefore needed to join other firms to create one big power.
Does this all still apply though in a market where lenders are trying to cut their distribution and cut down the number of packagers they do business with though.
The smaller packagers are starting to leave the market which leaves the larger ones left, making it possible for these to deal directly with the lenders.
So where does this leave the packager association, Andrew Hewitt, managing director of packager Oryen and spokesman for the Alliance of Mortgage Packagers and Distributors says any alliance must continue to evolve and demonstrate tangible benefits to its partners if it is to survive.
He says: “We believe that as the market continues to consolidate it is likely we will see other alliances withdraw from the marketplace. Much will depend on each alliances commercials and ability to keep costs low. AMPD has always traded as a not for profit alliance therefore have never paid dividends to members meaning we have a healthy balance sheet with minimal overheads.
“This does not make us complacent as we recognize the need for us to prepare and plan effectively in order for us to negotiate the current malaise. However we remain vigilant in our expenditure and feel confident that we have the right combination of prudent management and membership to maintain and develop our current position.”
It might be that the natural evolution of the packager market will result in the exit of even more packager associations, leaving just a couple that will be able to flourish and take the market share.
When Helen Hymos, acting chair of the Professional Mortgage Packagers Alliance bowed out of the market she didn’t predict the end of packagers themselves, but says that single packager businesses of all sizes have had their day.
She says: “PMPA was the first of the packager alliances and it was some time before we were followed by RAMP and others, all of whom recognised the value of a group working together.
“Times have now changed and PMPA is taking the lead once more in recognising that the days of the packager alliance are numbered as lenders review their ‘to market’ distribution needs in a totally different light. It is our considered view that lenders will still require distribution and that will be, in large part, through packager companies. However, this is not likely to be in the volumes or style that we have seen hitherto.”
Hymos believes lenders will manage their distribution in smaller, more controlled tranches of business through much tighter relationships and with fewer distributors.
There is no doubt that Hymos thinks the days of lenders offering exclusive deals through alliances is over.
As packagers fight for their own survival they cannot be sure of what is going through the mind of lenders, some of which are not even sure themselves. Lenders have not expressed any desires to cut off distribution through packagers altogether, but many have shown signs of not wanting to deal with them in such large volumes.
Future relationships will be built on who packagers know and how they can form relationships with lenders, but there is no reason the same cannot apply to packager associations.
It may not come soon, but lenders one day will look to gain back their market share and will need brokers and packagers to do this.
Predicting the end of packager association is a question of what came first, the chicken or the egg, nobody knows either way and if lenders are still unsure about how their distribution model is going to work going forward then packagers and associations will just have to play the waiting game to see how their future will unfold.