We Introduce You

Following in the growing trend of the retail and non-financial service sectors acting as secured loans introducers, Harvey World Travel is going to start offering secured loans in its shops.

Harvey World, an Australian based group of travel agents, has signed a deal with Promise Finance to offer secured loans and mortgages in its UK stores. Harvey World Travel, who also has a large franchise network, began expansion into the UK in 2004 and in 2005 bought 22 shops from the Wardle Group. The loans will be offered for any purpose and not just holidays.

Harvey World will begin the roll out of the new offerings in some of its larger travel agents in the early part of next year.

Promise Finance has said this is the first of a number of strategic alliances it will be launching in the next six months.

This news follows a remarkable increase in the number of entities now acting as introducers for secured loans. In recent years, companies like the AA, RAC, Sainsburys, Tesco and Asda have signed introducer agreements and offer secured loans branded under their own names.

With the fact that people regularly book their holidays months in advance allied to the comparatively short turn around time for secured loans, this new channel will probably work for Promise.

The main problem I have with it is when advice about a holiday gets mixed and mingled with advice about a financial transaction. In the models mentioned above, the Supermarkets and Breakdown Service companies have no ‘one to one’ interaction with the client and the loans are promoted textually in leaflets and websites.

This new type of sales channel might cause some questions to be asked.

The Regulatory Alliance of Mortgage Packagers (RAMP) is to form a new industry-wide compliance forum.

The new forum, which is aiming to have 12 delegates, is designed to better represent the differing views of all the mortgage industry. It is envisaged that the new group will comprise of four lenders, one packaging alliance (RAMP), two independent packagers, three directly authorised intermediaries and two networks

The new voice piece will be called The Mortgage Compliance Forum and its main purpose will be to engage the FSA and share views before policy decisions are made.

The FSA has said that it wants better industry cooperation, but the problem here is that although the new group will go some way to appeasing the regulator, there is still going to be a disjointed industry because of the number of rival groups to RAMP.

Correct me if I am wrong, but a quick glance around the Internet reveals there are the Professional Mortgage Packagers Alliance (PMPA), the Alliance of Mortgage Packagers and Distributors (AMPD) and the United Packagers Association (UPA) all doing a similar pre forum thing to RAMP and surely they will already have similar plans or their own ideas about compliance.

By either using a Boxing Association or Judean Peoples Front analogy, there just seems to be too many groups.

For the last year the FSA has been working with mortgage firms to improve the standard of advertising and other promotional material.

In October and November this year it visited all the worst offenders and found that the same companies who were at fault with advertising also had deeper problems with processes and procedures. It has asked 200 morgage brokers to amend or withdraw misleading advertising and a number of companies have been referred to the FSA Enforcement Section for further investigation. During its investigation it also found examples of customers being sold Sub Prime mortgages when there was no evidence of credit impairment. This is actually a subject I’ve written about once or twice before and I’ve warned people that some brokers only deal in Sub Prime and to keep the customer, don’t inform them there are Prime rate alternatives.

As part of the press release about the investigation, Vernon Everitt, FSA retail themes director, said:

“Financial advertising has a massive influence on the decisions people make. So it must be clear, fair and not misleading, leaving people with a balanced picture of the key pros and cons. This is particularly the case in advertisements by mortgage brokers in the sub-prime market, where people are making one of the most important financial decisions of their lives. We need to see standards here rising - and fast.”

Given that advertising is one of the areas the FSA and OFT have combined forces on it is probably only a matter of months before the OFT come knocking on providers of Secured Loans doors.