In a two-page report on UK brokers, we examine the
latest funders to have pulled out of introduced business – and
whether a Canadian subprime player might be a tonic for the market
in 2010
The good news should be obvious: for
the first time in six quarters, a decent number of lenders are
beginning to take an aggressive stance towards the market, and
brokers are finally back in the picture.
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At the near-prime end of the market, State
Securities and the Close Asset Finance group are pushing for more
business, with the latter launching a new business, Close Business
Finance, to aid expansion.
Meanwhile, Canadian D&D leasing has been
quietly growing its panel, and Norton Folgate is looking to start
writing business of its own.
Even in the battered tier one funding
environment things are beginning to stir, with Investec said to be
pursuing the old role held by Bank of Scotland, and new name
Aldermore rumoured to be sitting on a broker pot worth £100 million
(€109 million) for 2010.
Gold rush mentality?
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By GlobalDataBut to promote a gold rush mentality would be
misleading – most of those with big plans for the next year have
already got their broker panels in place, and won’t be looking for
more for a while yet.
In addition, it seems the big funders have not
quite finished haemorrhaging broker links yet, especially in the
motor world.
Last month, Fortis Lease pulled out of all
broker-introduced business in the UK, in a move that signals that
the review of business undertaken by new owner BNP Paribas may
finally be beginning to bite.
Whereas Fortis’ involvement in the broker
market for general asset finance was extremely slight, it was a
major player in the motor finance sector, where it enjoyed joint
ventures with several large car finance introducers.
This situation came to an end at the beginning
of October, when several of Fortis’s broker partners received
correspondence stating that, following a business review as part of
the ongoing merger with BNP Paribas, introduced business would be
no longer be accepted.
For the firms which will now have to extricate
themselves from Fortis joint ventures, this will be frustrating
news.
For those introducers who have relied on
Fortis for lack of other funders, it may be crippling.
The cut has brought a hard finish to a year
that began with Arval significantly reducing its broker panel, and
which later saw Lex Autolease slash its relationship tally by
70.
Speaking of the year as a whole, Paul Bulloch,
managing director of broker Concept Vehicle Leasing, said: “These
are significant changes, and there are undoubtedly going to be some
brokers – including some fairly sizable organisations – left with
no direct funding lines.”
Market ‘overheated’
“The market seems to have overheated, and
funders are still looking to streamline the number of introducers
they have,” Bulloch said.
Nigel Hawkins, group sales director at
brokerage Jigsaw Finance, commented: “[Fortis’s decision] typifies
the vulnerability that still exists in a market, where the bankers
are still reacting to the effects of the downturn and using the
opportunity to realign their structures.
“I guess the scarcity or the restriction in
the use of capital has made companies look to their various
business models, and where returns are poor, decisions have been
made to exit these sectors.”
Hawkins said that the lack of available
funding to brokers could cause a rise in broker-to-broker
business.
“This practice will effectively go
underground, making brokers and funders even more vulnerable,” he
said.
At the same time, Network, the broker division
of Lease-Plan, has cut nearly half of its broker relationships.
The leasing company’s UK MD, David Brennan,
said the decision followed an annual review.
“This strategic review is part of our desire
to work closely with those intermediaries whose business goals and
standards are in line with our own,” Brennan said.
“[The review was] Designed to ensure that our
established standards are maintained in relation to customer
service and overall business performance.
“This rigorous process is undertaken with all
of our intermediaries annually and, as a consequence, where
standards or performance levels are not achieved will result in us
parting company.”
Fred Crawley
