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Kensington takes direct route with TML buy

Sub-prime lender Kensington Group is buying direct-toconsumer non-conforming specialist The Mortgage Lender for £15m to diversify its distribution.

Kensington says it will have three distribution channels – intermediaries through packagers, partnerships with national chains such as Prudential Mortgage Services and to the public through TML.

Southampton-based TML, set up in 2000, employs 139 people. It generated revenues of £6.7m last year and made a profit of £1.3m on business sourced through consumer media advertising. Kensington says the TML brand will stay.

Kensington is offering financial incentives if TML reaches a profit of £2.41m next year, £4.34m the following year and £9.96m in 2005. It says the acquisition will increase its share of the first charge non-conforming market to around 15 to 20 per cent.

Broker club Mortgage Intelligence believes Kensington is diversifying to avoid a dependency on packagers which may be hit if they are forced to be FSA regulated.

But packager The Mortgage Partnership director John Mawdsley is questioning if Kensington is still committed to that sector which currently handles around 90 per cent of its lending.

Kensington general manager marketing and strategy Alastair Pate says: “We still expect to grow our business through packagers. We are buying into a direct-to-consumer brand as there are a number of people who do not want to go to brokers.”

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