We Introduce You

The Abbey is to start referring on sub-prime business for the first time - sparking suggestions the lender is looking at the possibilities of entering this sector.

Abbey will refer any sub-prime business to Compass Finance. The scheme is initially being trialled in one call centre and a couple of branches and if successful, Abbey said it will roll out the scheme to its entire business by the end of the year.

There are a growing number of high street lenders now entering the sub-prime market - but Joe Wiggins said

“We have no plans to go into sub-prime. We just think this would be a useful service to provide customers who don’t meet our criteria. As soon as the customer is referred, it will be a Compass Finance client. We do have a commercial arrangement with Compass, but what we get out of it is confidential.”

I think this is just a case of rather than putting the phone down or turning a Customer away, Abbey has realised it can get additional revenue by acting as an Introducer to someone who deals in sub-prime.

I would think the level of business this could generate for Compass would be substational and note they haven’t made any form of stock market announcement.

Compass brokers and packages mortgages, secured loans and unsecured loans and also provides Individual Voluntary Arrangements (IVAs). Earlier this year it bought The Debt Advisor.

Perhaps the added responsibilities (mortgages, insurance etc.) has hastened the decision, but the Financial Services Authority (FSA) has signed a multi-year agreement with Capgemini, Tata Consultancy Services (TCS) and Xansa to work in partnership with the FSA to transform its Information Systems Division’s capability.

It’s surprising that - having browsed around the three Company’s recent financial information - I can’t find any stock market announcements. Perhaps the dotted lines haven’t been signed yet, the contracts aren’t substantial enough to report on or maybe I didn’t browse back far enough.

What is probably less surprising is that one of the organisations is French (Capgemini), one is Indian (Tata) and only one is British (Xansa). Although all three have a strong UK presence, cost reduction or not I believe an organisation as threaded into the British financial institutions as much as the FSA is, should stay primarily British.

Darryl Salmons, IS Director at the FSA said:

“In 2005, the FSA conducted an IS effectiveness review and concluded that it needed to transform its IS operation. We are delighted that with the support of our application development partners, the FSA will be able to deliver a large portfolio of business applications more effectively. The agreement enables us to strengthen the alignment with our business priorities and will give us the flexibility to meet the challenges facing a modern regulator.”

Deutsche Bank who launched DB Mortgages in April and looked like they were going to become a major force in the UK ’specialist mortgage’ market are said to be suffering from major service problems.

Best Advice reports

“BestAdvice.net has been informed that Deutsche Bank’s lender db mortgages is suffering “major” service problems just four months after launch - with packagers stating db had a 10-day backlog on cases.

Packagers have informed BestAdvice.net that db was taking around three days just to look at the AIPs (agreements in principle). It is understood db has withdrawn its fixed rates and re-priced its tracker deals to effectively “price itself out of the market” to help get service back on-track.

One packager said: “When you look at the current product range compared to the previous one, rates are typically 1% higher, so it seems they were trying to price themselves out.”

The packager said the underlying problem was due to db’s online decisioning system where the AIPs were being referred to the underwriters, rather than creating instant decisions. He said he was aware improvements have now been made to the lender’s online system where more instant decisions are now being created.

Bill Dudgeon, managing director of db mortgages, said: “We did withdraw the fixed rate, which was the main reason for the service blip. We found it was a market-leader, so a higher number of applications were coming in. We now have a three-day backlog, therefore getting from application to offer is taking about five days in total at the moment. With some packagers, there could have been a 10-day backlog, but only on certain individual cases. “

In January Deutsche Bank announced the recruitment of a mortgage lending team to develop “db mortgages” to offer sub prime, buy-to-let and self-certification mortgages in the UK. The team led by Bill Dudgeon all came from The Mortgage Business plc (TMB), a subsidiary of HBOS.

Only last month Deutsche Bank issued a press release saying it had commenced a broader rollout to the full packager market by increasing distribution from three to twenty packagers.

To quote from that press release

“In April 2006, db mortgages commenced a pilot scheme with three packagers to ensure that their systems and telephony were tested in a live environment. The broader rollout with the 20 registered packagers is the start of second phase of db mortgages’ expansion into the packager market.”