The big sourcing systems have no incentive to change

From Ernie Reeves

Simon Mouncher’s letter regarding sourcing systems (Mortgage Strategy October 17) is the tip of the iceberg and represents a much deeper underlying problem faced by packagers and product providers who want to see their products on one or more of the main sourcing systems.

Packagers, branded mortgage arrangers and lenders have little or no choice but to have their products represented on the main sourcing systems as the majority of brokers use one or other of them.

What we have is a monopoly situation whereby the sourcing systems have product providers over a barrel if they want brokers to see their offering. Therefore there is no incentive to either reduce the cost or improve the service. This is what Mouncher is complaining about.

Our specialist sub-prime sourcing system Place Me carries products from 50 lenders and includes branded lending arrangers. Our policy of not charging for product changes is unlikely to make the big sourcing systems lose sleep. Place Me has only a fraction of the broker coverage of the big boys. And as long as there is so little competition, the idea of the big sourcing systems actually altering their pricing or service to product providers is a non- starter.

This will only happen when product providers like Mouncher’s company have more control over the delivery of product information to brokers or there is more competition. What incentive have the big sourcing systems to change the status quo? None.