"The lack of transparency and the extortionate fees that have been charged historically have been a blight on the product and its potential."
FR: Thistle Finance launched earlier this month – tell us a bit about your proposition and what you can offer to brokers.
We decided to launch Thistle Finance for a number of reasons. For starters, the Northern Ireland and Scotland markets are hugely underserved. We’ve known this for some time because we are based in Edinburgh and our sister company, Edinburgh Mortgage Advice, is a mortgage broker that has experienced the exact same problems we have set out to solve.
For some packagers, these markets are a bit of an afterthought and we want to put that right. Our goal is to fill the gap in these two key markets and, while we’re there, try to improve the way things are done. But that’s not to say we plan to limit ourselves to Scotland and Northern Ireland. Over time, our goal is to offer a compelling proposition to brokers around the UK, one that is hopefully a bit more authentic and grass roots than what’s available through the existing players.
In terms of what we offer, we’ll be focusing on the usual suspects but in a way that will be 100% centred on brokers and their clients: so seconds, bridging and development finance, commercial mortgages, complex residential and buy-to-let, and equity funding and joint ventures. The fact that, with EMA, we can see things through the eyes of a broker, too, will hopefully stand us in good stead and give us a perspective that other packagers simply don’t have.
FR: You say you are going to return packaging to its roots. In your eyes, what’s wrong with packaging as it stands?
How long have you got? For Mark and I, the packaging market today is a bit too glossy, a bit too greedy and needs to get back to basics. It’s hard to deny that some of the fee structures operating at present are simply unjustifiable. This is particularly the case in the seconds market and is without doubt one of the key things holding it back. How can a market come into its own when it is weighed down by some of the inflated fees currently being charged?
None of this is helping the reputation of brokers, either. After all, how can a broker possibly be doing the right thing if, in recommending a second charge, they are weighing their clients down with massive fees? This has to change and it has to change soon. We certainly hope to do our bit in bringing about that change and want to return packaging to what it should be, namely a no-fuss, transparent and fairly priced service sitting alongside brokers, and serving them and their clients.
FR: Bridging lending has seen a five-fold increase since 2011 – why do you think this is, and is the trend set to continue?
Bridging, like many other financial services sub-sectors, has benefited from the incredible rise of alternative finance in the aftermath of the Global Financial Crisis. What we have seen is a new wave of bridging lenders emerge who are considerably more transparent and fairly priced than the lenders that were dominant pre-2008. The GFC hit the established financial services market for six and it opened the way for a much more professional alternative finance sector that is now genuinely competing with the established banks. Bridging has been riding that wave and is now seen as another potential lending option rather than the lending of last resort. And yes, I expect the current success of the market to continue. The only concern is that the market has now become saturated and standards need to be maintained.
FR: What advice would you give to brokers who are new to the specialist lending market?
Don’t just plump for the first packager or master broker that comes along. A bit of research and due diligence will do you, and your client, a world of good. If you take a short cut and your client suffers, your own business will suffer, too. Oh, and well done for opening your business to this channel. It will be a better business because of it.
FR: You’ve been quite vocal about the seconds market. What do you think is wrong with it right now?
Firstly, I’m pleased to hear that our views are starting to get out there. Secondly, when it comes to what’s wrong with seconds, I’m not sure where to start. What you have here is a form of lending that in itself is perfectly viable and the right solution for many borrowers in many circumstances, but the lack of transparency and the extortionate fees that have been charged historically have been a blight on the product and its potential. And while the fee structures in play are starting to change, for me they’re changing too slowly. Saying that, I still think the sector will come good and there are already signs things are starting to improve.
FR: If you could see one headline about financial services in 2017, what would it be?
“Nationwide survey of brokers reveals packaging market is broken and needs major shake-up.”
