First Plus pulls out of Secured Loans Market

[Mike_M]

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Details here: Finance-Affiliate.co.uk

What are your thoughts?

Mike

[tomj]

bad for skint homeowners trying to take equity out of home to refinance...

bad as a signal of whats around the corner recession wise as lets face it.....the likes of first plus have no business model when people have no equity in houses!

bad for moneysupermarket, shares fell 17% on news as had to revise earnings down £7m on this??

Good as no more annoying Carol Vorderrman (?) ads on tv selling people into stupid refinance deals they cant afford long term anyway. :tup

[LoanMachine]

The concern is - what will the knock-on effect be?

Will Paragon / other prime lenders get the jitters? Or are they happy because of the extra business? Do they have enough capital to fund the expected new business?

It can only be a bad sign for the Secured Loan industry.

Chris

[Leon2000]

Apparently they are only pulling out of the broker market at present.

Not good news for brokers/packagers and Introducers alike - another product gone from market ultimately means less deals placed!

[affiliatemarketingltd]

oh f*** springs to mind !

[LoanMachine]

More detail available here: 300 jobs to go as Firstplus closes new business - WalesOnline

Chris
Homeowner Loans | Debt consolidation | Secured Loan - Loan Machine

[jimmysavage]

More detail available here: 300 jobs to go as Firstplus closes new business - WalesOnline

Chris
Homeowner Loans | Debt consolidation | Secured Loan - Loan Machine

Interesting article, although I am a little surprised they are saying demand has fallen away.

It seems that this is NOT just a case of supply is exceeding demand, and certainly highlights the fact that a recession which is just round the Johnny Horner.

[Michael_Anthony]

My understanding is that the decision was made as a result of difficulty in obtaining funding through the markets, but that this was not seen as good PR for Barclays, so they claimed a lack of demand.

We are not seeing a lack of demand in the secured market, but what we are seeing is a genuine lack of ability to actually get deals done as lenders become more and more cautous. Reduced conversions lead to reduced CPA's.

The withdrawal of First Plus from the market will only make things worse, IMO.

Interestingly, the unsecured market is booming - maybe because consumers no longer have confidence in their home's equity being adequate to finance further borrowing.

[crazihos]

To claim lack of demand is just silly, if anything demand from people looking to consolidate has shot up in the last few months and because of the credit crunch people who would normally go unsecured have been much more willing to go take secured loan quotes when offered them than would have 12 months ago.

I see it as very bad news though as the majority of my converted leads have been from firstplus and they offered the best rates in the majority of my cases.

It'll be interesting to see if customers will still convert at the higher rates brokers will be offering them now Firstplus have gone.

[peter113]

i think the unsecured borrowing is booming becuase clients cannot get the mortgage or secured loan deals ie last resort pre Debt management

this does leave a vacuum for business as held such a big market share, all eyes pointing at nemo, paragon but considiering paragon stopped lending on mortagges dont expect them to step up to the mark and nemo's owners are generally not considered big enough to fill the gap either .... seems to be critiera will tighten = less conversions

CPA might drop but might be an opportunity to look at smaller CPA and some commission share instead

if you speak to many brokers ( not master brokers) they didnt do too much with first plus as focused on self cert / sub prime / diffuclt cases as most of this business sold direct so still good opportunties if the lead criteria is right i.e loan to value, income, credit status or not as the case may be !!

[wahideas]

If you think that's bad, NOW First Plus (Barclays) is trying to claw back commissions paid to brokerages back to 2006!! Barclays has lawyers looking over contracts signed with brokerages...going over them with a fine toothed comb and are now trying to CLAW BACK commissions on cases that completed over the past two years, but then went on to remortgage. How great is that?? Just hope you are not affected by this...but seriously, how low can they go??

[gramtrad]

If you think that's bad, NOW First Plus (Barclays) is trying to claw back commissions paid to brokerages back to 2006!! Barclays has lawyers looking over contracts signed with brokerages...going over them with a fine toothed comb and are now trying to CLAW BACK commissions on cases that completed over the past two years, but then went on to remortgage. How great is that?? Just hope you are not affected by this...but seriously, how low can they go??

How low can they go? I heard that they (Barlcays) had actually cancelled some of the loan cheques sent out to customers recently!! Can you imagine that ? You apply for a loan with a major reputable company; you get accepted, receieve the cheque and then they cancel when you may have comitted to the expenditure!

[Michael_Anthony]

We got hit with a couple of these last month - just took them on the chin as we didn't see it as fair to pass on to the affiliates, and it's not like we can't afford to lose the odd few k here and there.

(Had a similar issue with a bloke who we treated to a £5,000 ski trip stitched us up for £30k a few months back, and then did direct deals with the affiliates we introduced him to on the ski trip, but that's another story.)

From their point of view (First Plus/Barclays) it kinda makes sense. They don't need to keep on good terms with people they are no longer doing business with, and no doubt their accountants have added up the numbers and asked why a loan which the customer has repaid early should count towards a broker/affiliate's commission.

Not nice, but understandable under the circumstances. And pretty common in other industries too, from what I understand of it.