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Retention seeker

Lender profile Guy Anker finds that BM Solutions is focusing on retention and technology to stave off the challenge of new lenders

BM Solutions has gone through a period of major transition in the past year but insists it has come out of it stronger. The HBOS lender lost its top brass last September to join Oakwood, which later became known as Edeus, and more departures followed earlier this year.

Among the departures were HBOS head of specialist lending Michael Bolton and director of Halifax Intermediaries Alan Cleary, who were both critical to BM’s rise in the past few years. Many commentators thought the lender would have problems but it has steered its way out of trouble under managing director Nigel Stockton and director Tim Hague and says its has achieved record lending levels in the past few months.

Hague says: “When you have people going, there is inevitably concern but we have got a lot of good people at HBOS so it was not the biggest dent, even though there were some fairly big positions. We came out fighting.”

BM, which has also had to withstand the threat of new lenders such as Edeus and DB Mortgages entering the market, says on May 9 it had 145m in applications, the highest number ever submitted in a 24-hour period.

A big part of BM’s policy is retention. In April, it set up a pilot offering retention incentives on sub-prime deals which was extended to self-cert and eventually rolled out across the board as a full-blown initiative in July.

Hague says: “Retention is evolution, not revolution. The philosophy at BM in the past was growing market share and moving from mainstream into specialist markets without a focus on retention. What has happened recently is that the market has more players so we needed a big focus on retention. I don’t want to do super-duper products for two years as it gives retention problem in two years.”

BM has been criticised by rivals such as GMAC for its retention strategy but most brokers have welcomed the move. BM says balance sheet lenders such as itself will have to try to retain as much business in future as possible to stave off the threat of new lenders but that securitisers will have to compete on higher proc fees for first-time business, which Hague believes may eventually hit their margins.

But BM could yet be one of the securitisers, as Hague revealed two weeks ago in Money Marketing, although he stresses that talks on the subject are at an early stage internally and if business is securitised, it will only be a small proportion.

GMAC and BM are also likely to go head to head on point of sale offers. GMAC has set up Poso and Hague says BM is likely to follow suit by Christmas although it is yet to decide its pricing structure.

BM aims to go one better than instant decision, with instant completions for further advances. Hague says: “I want to get to a point when a customer rings up for a further advance in 2007 where we have a 60-second decision. It would be nice to get to one-hour completion, not just one-hour offer. Why not if you already have the details? We have to work on that to make sure brokers are not cut out of it.”

Hague sees good service as one of the firm’s four key drivers. The others are retention, responsible lending and a focus on good credit risk management.

On service, Hague says: “We are the number one specialist lender and I don’t intend us to lose that ground. I refuse to be beaten on service. If it is the about cheapest price, then there will only be one winner in the market but it is not as service is crucial. Even if others offer robust service, then we will beat them.”

Hague says BM is still the leader in technology despite the recent moves by GMAC and Edeus. He says: “GMAC’s Poso creates some fun because our turn-round is six to nine days, which was industry leading anyway. Edeus will give us a run for our money and will cause us to look at things. Our technology is difficult to replicate.”

BM appears to have abandoned plans to offer equity-release products for now, as any HBOS launch is likely to be spearheaded by either Halifax or Bank of Scotland. BM also seems to have cooled its interest in the second charge loan market although it is not ruling out an entry.

Its focus is on retention and technology, especially with the threat of the new lenders coming in.


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