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Spinning plates

The past six months have wroughtbig changes in behaviour across lenders, brokers and consumers.Some common trends are emerging among balance-sheet players. Margins have widened as supply has contracted andthere are signs that an intermediary market long-famed for its competitivenesshas become devoid of innovation.

The plates are shifting across two landscapes in particular. First, the value chain. Lenders spent much of the last decade destroying value at the gain of brokers and consumers. But the pricing of products today indicates the credit crunch has granted them an opportunity to get the genie back in the bottle. Second, the plates between intermediated and direct to consumer channels are also shifting. Brokers should not be over-alarmed as what has in recent years been a 70-30 per cent dynamic will likelyonly alter by a few percentage points.

Brokers and packagers are by and large holding up well. The upsides are a: consumers need ever more discerning advice in a fractured market and b: because many practitioners run proprietorial businesses, they are fleet-footed enough to make changes to their operating models quickly.

The market has also been a Damascene experience for many brokers who previously simply acted as order-takers sated by rising procuration fees. Our own business is witnessing a counter-cyclical increase in life and general insurance sales which begs the irksome question as to why so many consultants did not sell such valuable and compliant protection before now.

Brokers are also buoyed by a £150bn remortgage market this year, which will have implications on the big mainstream lenders’ retention pricing. Abbey and Nationwide will be watching HBOS with particular interest.

Finally, the consumer, who has undeniably benefited most in recent times. The music has now almost stopped. The availability of product and the pricing have rarely been less benign and but for the fact that interest rates are still at historically low levels , we could all have been in a far worse state than we are.

Call me old-fashioned but people should not be borrowing beyond their means soa return to more pragmatic lender and borrower behaviour is no bad thing.

However, we may be through the worstof it. An early Easter and lighter eveningscan only help to restore more conven-tional transaction levels by April.Hope springs eternal.

Kevin Duffy is managing directorof Robert Sterling

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