Close Brothers considers setting up a UK lender

Close Brothers, owner of network Mortgage Intelligence, is considering setting up a lender at the end of 2006, with a decision due early next year.

The news has created concern as to whether the group would be creating a conflict of interest by having both a network and a lender in the group.

Bob Golden, a director of Close Brothers and chairman of Mortgage Intelligence, is believed to have been given the task of setting up the lender.

Sally Laker, managing director of Mortgage Intelligence, says this is one option Close Brothers is considering. But she stresses this would be separate from Mortgage Intelligence.

Laker says: “The company has taken a look at what is out there and setting up a lender is one option but nothing has been decided yet. If a decision were to be made it would be in the first quarter of next year. However, the business would be separate from Mortgage Intelligence.”

Bob Golden, director of Close Brothers, says: “We regularly conduct strategic research into various types of business. We have conducted a strategic review of the mortgage market. Setting up as a lender is an option but we have not made a decision. That won’t come until the first quarter of 2006.

“We do this all of the time in other markets and institutions, so it really is nothing out of the ordinary.”

However, one industry source says: “If it were setting up a lender the Financial Services Authority would take a dim view of the companies working in collusion.”

Dev Malle, head of operations at Pink Home Loans says though it would not be a first in the market for a company to have both a lender and a packager, it could raise concerns.

Malle says: “If it does set up a lender it would not be the first time that a company has had two successful operations. Manchester has both a lender and a network so it wouldn’t be unique.”

Robin Gordon-Walker, spokesman for the FSA, says that as long as the two companies act as separate entities and follow the FSA rules there should not be any problems.

He says: “Any lender or broker, regardless of who owns it, must act as a separate entity and follow the FSA rules.”