View more on these topics

Prime time

Derbyshire Building Society has long shown a commitment to the intermediary market since Tony Capon took over the adviser channel some five years ago.

But now the group is taking one further step to develop its distribution tactic by launching into the sub-prime market – starting with Pink Home Loans.

The two have worked closely together to develop a 5.75 per cent two-year tracker and a 5.95 per cent two-year fixed rate product.

Derbyshire already offers a sub-prime service buying non-conforming portfolios from the likes of GMAC-RFC, Amber Home Loans and Kensington Mortgages through Derbyshire Home Loans. There is now some 700m of assets under management. But Capon says it will be entering this area of the market with a much more strident attitude.

“We hope to ramp this up within the subsidiary and expect to build up assets under management to 1bn. But we are also launching a range of sub-prime and non-conforming products,” he says.

The first stage of the launch will be through Pink Home Loans. The exclusive arrangement means Pink will package the loans on Derbyshire’s behalf. Derbyshire is offering onsite underwriting to get speedy decisions for brokers.

The arrangement with Pink, though, is finite and Derbyshire hopes to be able to offer further prod-ucts and arrangements with other packagers and distributors in the near future. Ultimately, the goal is to offer sub-prime products direct to brokers.

Capon says: “The prime market is very competitive and there are a lot of pressures on prime product sales between building societies. It is a very crowded marketplace. We remain committed to prime but need to augment our presence in other areas.”

Current market conditions are creating opportunities for lenders to deal with the increase in consumer debt, including bankruptcies particularly among the under-30s, according to Capon.

“There is a growing market to help people consolidate those borrowings. Interest rates have risen in the last year and, for many, pressure on budgets will result in a small increase in defaults. There is a massive market out there,” he says.

Where in the past sub-prime was dominated by big players with little interest from the smaller lenders, the tide is now changing, Capon says, especially since the perception of the typical sub-prime customer has changed.

But Capon is not just interested at stopping at sub-prime.

“There is growth in the area of near prime too – somewhere in that grey area between prime and adverse lending, for people with modes default histories. The important thing to recognise is that there are people that are not consistent defaulters. It is the responsibility of the lending industry to recog-nise that these are good customers,” he says.

To enact Derbyshire’s growth plans, it will inevitably have to go through some significant changes in its IT systems, something Capon confirms is already happening to its core systems.

“We will expand sub-prime and delivery with a full end-to-end online administration system for sub-prime and other ranges for intermediaries,” he says.

Derbyshire’s commitment to creating a sub-prime range and instigating improvements to its technology systems is shown by the appointment of Brian Carney, previously of HSBC.

Carney’s experience in asset finance will enable him to look at specialist lending with a professional’s eye.

Asked which other areas would be open for Carney to look at, Capon gives that age-old answer: “Nothing is ruled out.”

Derbyshire is also well known for its buy-to-let proposition, often appearing in the best buy tables. Its BTL business was up by 60 per cent last year and it has openly increased its business objectives on BTL by moving into the market much more aggressively. It services a mixture of amateur and professional landlords.

Capon says Derbyshire “remains bullish about BTL”.

The building society has a strong relationship with several firms for BTL services. It has cut the rates of the fixed rate BTL mortgages – it funds exclusively for Mortgage Intelligence, Pink Home Loans and Premier Mortgage Services.

Borrowers will benefit from a rate reduction of 10 basis points on all three exclusive products. The three-year fixed rate BTL product that the lender funds through Mortgage Intelligence will now have interest fixed at 5.8 per cent. It also has 250 cash-back incentive for remortgagers.

The three-year BTL loan for Pink fixes interest at 5.08 per cent and is subject to an application fee of 495.

The PMS three-year product fixes interest at 4.99 per cent, also with an application fee.

Derbyshire clearly has strong relationships with some of the well-known names in the mortgage distribution and packaging market. Both Pink and Mortgage Intelligence have been dogged by rumours this year as to whether their respective owners will choose to sell in what has been a tough year for some.

Capon would not comment on the rumours but when asked whether he would consider buying into distribution, he says: “Within our ambitious growth plans, we are looking for opportunities for acquisition. We are keen to talk with people who are interested in forming other alliances, providing there is synergy with our other plans.”

Having been at Derby- shire for 11 years, Capon has been a witness to change. But it looks like a lot more is just round the corner.


GAM appoints head of compliance from Deutsche

GAM has appointmed Scott Sullivan as group head of legal and compliance.Prior to joining GAM, Mr Sullivan spent five years within Deutsche Bank’s London legal department, where, most recently, he was responsible for the legal support of Deutsche Bank’s asset management, private wealth management and offshore businesses. Sullivan qualified as a barrister in England and […]

Management changes will see relegated funds improve

F&C, Baring and Abbey all say funds which feature in Chelsea Financial Services’ relegation zone of poor performers will improve now that manager changes have been made. F&C’s North American fund has lost 30.8 per cent over three years and features in the North American equity relegation zone. F&C head of communications Jason Hollands says […]

IFAs opt to spread regulatory costs

Around 1,750 small firms have signed up to pay their fees by instalments, according to new figures from the FSA. The fee paying instalment plan was introduced earlier this year to allow IFAs to spread the costs of their FSA, FSCS and FOS fees, after IFAs were hit with a major hike in FSCS fees […]

Threadneedle chief in move to Henderson

Henderson has poached former head of UK equities at Threadneedle Graham Kitchen to head its thema- tic team. Kitchen has been tasked with improving equity performance at Threadneedle for the past nine months. At Henderson, he will report to head of equities Andrew Formica who has been with the firm for 10 months. Kitchen also […]

Can you put a hat on?

By Sarah Scott, marketing consultant You might think the question in the title is a strange one. Perhaps even more so when you learn that it’s one of several asked as part of an assessment for Employment Support Allowance eligibility in the opening scenes of the 2016 film, ‘I, Daniel Blake’. Daniel is a carpenter […]


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