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Mortgage edge: Peter Beaumont

Last week’s headline, Lenders to be named and shamed by BM, caused a few raised eyebrows in the industry, not because of the nature of BM Solutions’ latest initiative but because of an overwhelming sense of deja vu.

Whenever BM Solutions wants to promote its products and services, it always tries to give them an additional shot in the arm by creating a sensational supporting PR campaign.

Does anyone remember the BM Seal of Approval – a way to give unwanted packagers a good clubbing so that it could cut them out of the loop – or BM Solutions’ attack on sourcing systems when it wanted to drive brokers to its website to transact business?BM Solutions’ latest so-called educational campaign is purporting to help brokers with “a low level of understanding in the mortgage market” to get their act together.

It is going to do this by targeting lenders which are “not operating in the spirit of regulation”.

Apparently, Mortgages plc is to be high on the hit list because we pay brokers a higher procuration fee than BM Solutions and this is “not giving a fair deal to consumers”. What utter rubbish.

Our chosen level of procuration fees impact on our profit and loss account and not the competitiveness of our products.

Our new range, which was launched only a couple of weeks ago with more enhancements to come, includes products which will stand up to comparison with BM Solutions both in terms of rates and features – which is what BM is really concerned about.

BM Solutions’ meteoric rise to fame during recent years has been achieved without any real competition. For example, until recently, Mortgages plc has been an independent lender wholly reliant on wholesale funding and securitisation for survival. However, our recent acquisition by Merrill Lynch has changed all that.

We are now owned by a global financial institution with a strong balance sheet and deep pockets. Suddenly, we can compete head to head with BM Solutions on equal terms.

Mortgages plc is not the only specialist lender vowing to make its presence felt. GMAC-RFC has said it wants to become the biggest player in the sector and, last year, showed that it has the ability to realise that ambition.

A whole pack of other lenders are also jostling for position, including Platform, SPML, Kensington and The Mortgage Works, to name but a few. For BM Solutions, winning market share is not going to be as easy in the future as it has been in the past.

Comparing product or service offers against competitors is fair game – supermarkets are at it all the time – but trying to use regulation and a so-called educational stance to simply create a platform for self-promotion, is shameful.

BM Solutions’ condescending comments about brokers’ “low levels of understanding” is both inaccurate and insulting to the very people who feed it business. I think brokers do understand the pros and cons of what lenders have to offer – it is, after all, their job.

If there is a knowledge gap as far as regulation is concerned, isn’t it the role of organisations such as the FSA, AMI and network principals to fill that gap?If BM Solutions is really interested in helping brokers, why doesn’t it sponsor a series of AMI training courses?Trying to snuff out the competition with bad-mouthing marketing campaigns is a tactic that British Airways tried against Virgin Atlantic with an embarrassing lack of success.

Interestingly, it was also a battle of David versus Goliath, in which Goliath was starting to become very nervous about competition looming on the horizon.

It is sad that an organisation which has achieved as much as BM Solutions feels the need to stoop so low in its attempt to defend its market position.

I look forward to seeing how BM Solutions’ campaign unfolds. If, as last week’s Money Marketing article suggests, it is going to use MCOB rule 4.1.13 as a way of justifying its low level of procuration fees, I suggest it reads MCOB very carefully beforehand, so as not to repeat the embarrassing errors it made when it tried the same tactic last year.

Brokers are not stupid – they understand what is going on. Competition is becoming intense and, as a result, borrowers are getting better deals than they have ever had before. No one needs a BM Solutions PR campaign to understand that.

Peter Beaumont is sales & marketing director at Mortgages plc

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