View more on these topics

&#39Basel II may force sub-prime firms to raise prices&#39

Sub-prime lenders could be forced to raise prices by Basel II capital requirements because of their high level of exposure to riskier borrowers, warns the Council of Mortgage Lenders.

A CML report, called, Basel II Capital Accord: Impact on UK Mortgage Lenders, published this week, warns that this could be one of several unintended consequences of forcing lenders to price products more transparently in relation to risk from 2006.

The report also warns that some sub-prime lenders without the necessary capital may “withdraw from those market segments completely”.

It warns that there could be less price competition, interest repayments on sub-prime mortgages could be higher and high-risk borrowers could struggle to secure a loan.

Broker club Mortgage Intelligence thinks this paints a darker picture than reality, saying most sub-prime lenders do price for risk.

But lender Future Mortgages says firms without major lenders providing financial backing may find it harder to compete.

The CML warns that Basel II could see lenders choosing to deal with bigger intermediary networks rather than small brokers which will not be able to supply enough financial data for a risk assessment.

Head of external affairs Sue Anderson says: “One of the impacts of the accord will be greater pricing for risk and there will inevitably be winners and losers.

“But the report looks at the theoretical impact of Basel and in reality many other factors also affect pricing.”


Noble & Company – Abbey Shipping

Monday, 10 March 2003 Aim: Growth by investing in international shipping assets Minimum investment: Lump sum £3,000 Opening/closing date: March 5, 2003/April 4, 2003 for 2002/2003 tax year, April 30, 2003 for 2003/2004 tax year Charges: Implicit Commission: Initial 2.5% Tel: 020 7367 5600

Sandler takes over education role from Godfrey

Ron Sandler, architect of the Treasury&#39s long-term savings review, is to become chairman of the Personal Finance Education Group as Daniel Godfrey steps down.AITC director general Godfrey is stepping down from the PFEG after four years.Sandler dismissed speculation that he would apply for the role of FSA chairman when outgoing chairman Howard Davies leaves in […]

Portman and Sun Bank merge teams

Portman Building Society and specialist lending subsidiary Sun Bank are combining their intermediary sales teams although Sun Bank will remain a separate operation with its own staff, branding and product range. The new team of 12 will be headed by associate director (group intermediary sales) Paul Howard.

Golden fleece

Is the endowment review just another opportunity to fleece the client?I today received endowment review data for a new client. With the inevitable shortfall letter came an illustration for an increased premium to deal with the potential shortfall. The extra premium is 25 per cent of the current cost.At the 4 per cent growth rate, […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm