Intermediaries and lenders need to work closer together in the secured loans market to steady its ebbs and flows and create a better long-term outlook for everyone involved.
The challenge lies in both parties being disciplined enough to look past short-term commercial advantage and focus on working towards an environment that will serve everybody better.
This is incredibly difficult to do and without a concerted effort by everyone involved it will not happen.
However it is possible and it is something we should be striving for, especially at a time when there is uncertainty over funding lines and volumes in the market.
In the past lenders have been too quick to chase market share purely on the basis of rate and intermediaries have been too quick to grab what their clients are being offered.
This has forced one lender to follow another in the battle for new business and drag best buy rates down to a level where they are not economically viable in the long-term.
Rather than gorge themselves on business which carries such tight margins lenders could work closer with their partner intermediaries to offer a mix of products that generated business across a range of areas.
Some products could be very competitive, but by working closely with partners it would also be possible to keep a strong mix running through the pipeline.
By working more closely, lenders and intermediaries would be in a better position to understand and support each other’s business and create products that offered more than just a headline rate to their clients.
It is easy to sit and write about such things, but unless we actually take some decisive action then little will change.
In the first instance intermediaries and lenders need to be getting together and discussing the mix of products required and the best way to deliver them.
On both sides of the fence industry bodies also need to work towards creating frameworks in which members agree to cooperate and slowly we will be able to move towards an environment which is less prone to boom and bust cycles.
In the same way as access to easy credit over recent years has ballooned consumer debt; a clamp down in the credit markets does little to help anybody.
What we want is a market that is innovative enough to come up with the type of products that meet consumers’ needs, but disciplined enough to lend in a responsible and sustainable fashion in the long-term.
David Burrows is managing director of Secured Loan Services
The views expressed in this article are those of its author and do not necessarily represent those of the company he represents, IFAonline or any other Incisive Media affiliated organisation.IFAonline
Joined as head of strategy, multi asset, in June
Group income protection
Nine in 10 do not have income protection
Set to become part of Single Financial Guidance Body