Market Watch

Name: Steve Teague

Company: Click

4The secured loans industry has grown steadily for many years, ­fulfilling a vital consumer need for convenient, affordable finance where a bank or building society cannot help. The average broker has a professionally-run business, operating in a competitive and rate-driven environment. Uniquely, secured brokerages speculatively bear the costs of home valuations without even the luxury of a guaranteed sale.

Despite this, the industry has suffered a negative perception in some quarters and a lack of understanding of how it operates. Of course, the industry must shoulder some blame for an introspective approach that has allowed negative issues to remain unchallenged.

In 2005, Steve Walker, chairman of the Corporation of Finance Brokers, together with the leading brokers, saw that the organisation ticked very few of the boxes for a trade body, and had become simply a lunch club. He therefore instigated negotiations with the Association of Mortgage Intermediaries, and a new board of directors was appointed to create the Association of Finance Brokers (AFB).

The UK finance industry has experienced huge regulatory change over recent years and must expect more in the future. The secured loans industry has done itself a disservice by not being represented properly previously.

There are several challenges in the coming months that the secured loans industry can face knowing that it has a 'voice' and will receive a fair hearing. nName: Phil Whitehouse

Company: Pink Home Loans

4The Finance Industry Standards Association (FISA) has achieved much in raising standards in the secured loan market, especially by overseeing the improvements in advertising standards.

However, with the introduction of the AFB as the trade body for secured loan packagers and brokers, FISA's future in this role has become unclear. FISA could possibly still represent lenders relating to secured loan matters, but this may not be supported by lenders and asks questions of FISA's role.

In the new FISA management structure, there are currently only four lenders represented and buy-in from others might prove difficult. It may be that lenders choose to influence the market directly by representing themselves rather than relying on a third party to express their views. In addition to FISA, there is also the FSA, the Office of Fair Trading and, shortly, the Financial Ombudsman Service, which all regulate broker activity to various degrees.

We suggest that by implementing greater transparency on all fees and charges, increasing communication, and improving the way payment protection insurance (PPI) is sold, we will be able to create consumer confidence.

Brokers also need to embrace the philosophy of treating customers fairly by finding the best deal for their clients and avoiding high commissions that are often funded by large fees charged to the end user and the sale of PPI. n Name: Bob Sturges

Company: Money Partners

4The secured loans sector has reached an interesting - even defining - point in its evolution.

Secured loans have become more popular because there is a place for them. The reasons are well-documented, but include a growing consumer desire to repay less financially efficient unsecured debt. Also, more borrowers than ever have locked into attractive deals that discourage remortgaging but create an opportunity for secured loans.

Against this backdrop, the sector has welcomed new entrants at both provider and broker level. More can be expected as margins and income opportunities continue to erode into the mortgage sector, and as the reputation and image of secured loans improves. But firms will also be aware that they face a more thorough and complex regulatory regime in the future.

The time and conditions are right for firms to be adequately represented at trade body level. The broker community has responded by creating the AFB. But a gap remains for lenders. The sector's self-regulator, FISA, is thought to be considering this as an option but has yet to decide.

A well-structured trade body would serve to provide lenders with guidance and be an effective voice at a time of great change. Alongside lower product pricing and improved sales process transparency, it would also contribute positively to the future appeal of the sector. n