The term taxation refers explicitly to the manner in which certain lenders have been levying charges on consumers in the past two years. Such taxation has included inflation – busting rises in arrangement fees, non-utilisation levies and, of course, deed release fees.
What makes some of this pretty unpalatable is that, commensurately, most lenders have been reporting record loan volumes and trading profits. I appreciate that sizeable arrangement fees can often help to assuage a pay rate and assist in areas such as rental coverage formulae but the overall perception among intermediaries is that too many lenders are behaving in a cynical and profiteering manner and some practices are making a mockery of treating customers fairly.
Do intermediaries need to be more vociferous and united in their representations to both the lender and regulatory communities? Yes and in recent weeks, we have witnessed calls for a single trade body for all advisers and also a more coordinated packager voice.
On the former, I would be astounded if the genuinely independent sector was prepared to work with the single and multi-tied operators. As for the packagers, the existing trade bodies do a fine job and with packagers delivering close to £40bn-worth of loans a year, it could be argued that collaboratively they would achieve even greater returns for their memberships. But given how productive and, to some extent, sated these trade bodies presently are, I do not think they will ultimately risk a United Nations approach, wherein any and all legacy conflicts are left at the door.
However, fuller representation will surely occur in the realm of branded or, as I call it, DIY lending. Unity, Spectrum, Freehold and Concordia are all now off and running and I sense that the next 12 months will shape what the value chain looks like in 2008/9.
Some lenders may very well chant, you don’t know what you’re doing but does an intermediary collaborative really need to be authoritative on the physics of lending money from day one?
I am convinced that by 2010, the leading intermediary businesses will be enjoying an active profit participation in their originations. Some lenders need to be less patronising about how probable that may be.
Kevin Duffy is managing director of Hamptons International Mortgages