“In our book, there are only two things worse than a greedy packager. Being forced to use one. And being forced to pay their excessive and unregulated fees.” These words taken from Birmingham Midshires Solutions' latest advert knocking mortgage packagers shows they sure know how to make friends and influence people.
It's pretty damning stuff and BMS, through an integrated PR and advertising campaign, has deliberately set out to portray packagers in a poor light – except for some 14 companies who have been granted a 'royal' seal of approval. Quite what these exemplars of good practice have done to deserve this accolade (apart from being able to provide large volumes of business) is far from clear.
But according to BMS they offer 'added value' and are
not guilty of the sins of the rest of the packaging sector; being less than clear to customers about the procuration fees being earned, slowing up the mortgage process or massively overcharging for services provided.
Needless to say, the BMS campaign has caused a lot of controversy but one of the things that has struck me as odd about the debate so far is that few packagers have been prepared to put their head above the parapet and make their views known. Certain lenders, namely Mortgages PLC and SPML, have publicly taken issue with BMS but packagers have largely been noticeable by their silence.
I thought, therefore, it was time for the views of a packager to be put on the record. At this stage, it is also probably important that I declare any vested interests. Although, we are a reasonably-sized packaging operation, working hard to give both lenders and brokers a first class service, we have not been selected by BMS to be part of its elite squad.
This is perhaps a good thing because it means that at LMS we can say what we really believe, there is no threat of us being dropped by the manager if he does not like our attitude.
Whatever we think of Michael Bolton and BMS, any business that wants to prosper in the long-term must sit up and take notice when one of the biggest players in a market, with considerable influence, says that they are not happy with a service being provided and feel they are being ripped off. The question must be asked whether their complaints are reasonable or whether there is another agenda?
Packagers come in all sizes. There are some good ones and some bad ones. Size itself does not determine whether a business offers a good, competitively-priced service or not. Packagers operate in a very competitive market and at LMS we believe that we live or die by the quality of the service we provide. If we let a broker or lender down there is nothing to stop them going elsewhere next time.
BMS appears to believe that big equals good but my sense is that larger packagers do not have the same sense of urgency as their smaller competitors.
To them losing an odd piece of business due to incomplete packaging, missing documents or inaccurate form filling is not the end of the world. Due to their size, they can afford to be complacent.
My advice to any broker or lender, just as in any other area of life, is simple. If you are not happy with a service, tell the company concerned.
If it does nothing about it and it happens again, move on. There are plenty of other people who would be delighted to have your business. In that sense BMS is right to raise the issue about the quality of certain packagers. Every industry attracts its fair share of cowboys and the sooner they are kicked out the better. What they have done wrong is to place 14 packagers on a pedestal and treat everyone else as pariahs. Not only is this insulting to a large number of good but small packagers but also highlights what BMS is really attempting to do.
Despite its claims, the BMS initiative is not about raising standards. If it was it could have done the whole industry a favour by publishing its performance criteria and expectations and thrown down a clear and transparent public challenge to packagers. In effect it could have said “meet these performance criteria and we will do business with you. If you do not, then we won't”.
It may have been hard but at least it would have been fair and everybody would have known where they stood. Instead, in a very underhand way, BMS is trying to use its power and influence to corner a large section of the packaging market and drive many smaller packagers out of business. It might make good business sense from where Michael Bolton is sitting but morally it stinks. For a company that is so interested in transparency perhaps it is time it practise what it preaches.
But I do not suppose BMS cares very much about what we think at LMS. There is no doubt that the number of packagers is going to decline over the next few years, with or without the help of BMS, through a process of natural selection. Although packagers are not going to be regulated, the regulatory changes sweeping through the market will inevitably reduce the number of brokers and packagers.
Packaging is not a business to get into if you want to make a quick buck, the mortgage process is too slow for that and there is too much hard work and effort involved in generating a good income. There is also a constant need to invest in new technology. However, good packagers, whether approved by BMS or not, will survive because we provide a vital link in the processing chain and a service which both brokers and lenders undoubtedly need when it is done correctly.
Magnanimously, BMS has stated that it is prepared to add to its approved list of packagers in the fullness of time. To this end it has have come up with a catchy recruitment phrase: “Share in our values and you can share in our success”.
I am pleased to say that I do not share BMS' cynical values and look forward to a long and successful future not working with them but with their competitors.
The chosen few
Packagers, make your voice heard
Andy Linnet says it's time packagers responded to BM Solutions, which he believes is treating small packagers as pariahs and trying to drive many of them out of business
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