We Introduce You

An interesting one today, five of the largest brokers in the UK have formed a syndicate to give them greater bargaining powers with lenders over exclusive products and increased fees.

The five brokers, Alexander Hall, Chase De Vere Mortgage Management, Cobalt Capital, Hamptons International Mortgages and Savills Private Finance are aiming to produce £10bn of lending through the consortium in 2007.

The club called Concordia, which is Latin for harmony, will be chaired by Andy Pratt, chief operating officer at Alexander Hall, in its first year, although this may be alternated between the others until the group is confident it needs a full time managing director. Concordia is currently in the process of arranging individual meetings with lenders to discuss new terms and contracts.

The deal will not affect the independence of the brokers and is a loose arrangement between the brands, restricted to their own advisers. Concordia also haven’t ruled out accepting new members to the group in the future.

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.

Perhaps Antonio and Shylock from the Merchant of Venice have something to say on the matter, but maybe the Ford refinancing package announced today makes Ford the biggest secured loan customer in history.

Of a total amount borrowed of $18 billion, Ford have secured $15 billion of it on assets. They’ve secured it on manufacturing plants, various other real estate, some intellectual property, some or all of the stock in its subsidiaries and on some intercompany payables.

Ford are said to have around 100 manufacturing plants worldwide and employ 300,000 people to make Aston Martins, Fords, Jaguars, Land
Rovers, Lincolns, Mazdas, Mercurys and Volvos.

I wonder who got the commission?