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Stuart Pender

The chief executive of Paymentshield believes in making things happen and in his two years at the firm he has rebuilt the management team and, after a big takeover deal with one of the major general insurance brands, is now set on a five-year plan of aggressive growth. Interview by Nicola York.

He has certainly changed Paymentshield in the last two years. The company has gone from a family-run business set up in 1992 by Richard Riding and Patricia Cottrell to become the UK’s biggest supplier of mortgage-related insurance products to the intermediary sector and has just been acquired by general insurance giant Towergate.

Pender’s role at Paymentshield can be traced back to a chance meeting with the then HBOS chief executive James Crosby at Paddington railway station when Pender was commercial director of Bankhall. He had worked for Crosby when he was at Scottish Amicable and as a result of that meeting Pender became chief executive of Paymentshield and led a management buyout of the company in August 2004 backed by HBOS.

Finance was always going to be Pender’s career choice. After getting a first-class honours degree in maths at Glasgow University, he decided to train as an actuary. and joined Scottish Amicable but says he always knew it was a means to an end and that he wanted to get into the sales and marketing side.

“I was always looking for something that was a bit more innovative, I wanted to buy businesses, I wanted to change businesses.”

After Prudential took over ScotAm, Pender became commercial finance director on the distribution side of the business and then on to Bankhall.

Bankhall had a strategic alliance with Paymentshield and Pender says at the time Paymentshield was a business that was known to be up for sale.

He says the founder shareholders Riding and Cottrell were concerned about the business because mortgage regulation was just about to come into force.

“They were getting business from 16,000 mortgage advisers who were about to go through regulation. Their fear was that 16,000 was going to reduce significantly. The interesting thing from HBOS’s and my perspective was that we saw the change in regulation as an opportunity, not as a threat.”

In fact, Pender says the number of advisers almost doubled from 16,000 to 30,000 in the first 18 months of his tenure.

He is now the longest-serving director on the Paymentshield board after just two years at the firm. He is proud of the management team he has built, which he says was one of the main attractions for Towergate when it bid for the company.

The board is almost complete, with only an insurance director to be appointed in February. Sales and marketing director is Chris Traynor who was previously in a similar role at Prudential, Vernon Powell is finance director and was previously a partner at Deloitte and chief operating officer Richard Dixon was formerly at First Direct.

“I wanted to get people with big company experience but who were capable of getting their hands dirty and making it happen. The feel is not that of a big corporate. These are individuals who understand that world but who wanted out of it.” Pender replaced every member of the original Paymentshield board over 12 to 18 months, with the founders leaving on day one.

This year, Paymentshield will be moving its corporate, sales, marketing and product centre to Edinburgh at the end of February but will be keeping its main staff base in Southport. The decision to open a new base in Scotland was to ensure the company has a second site to expand into.

The decision was made ahead of the Towergate deal and Pender stresses the management team had decided on the move before Towergate came along. It has led to 10 people leaving but has created 40 jobs in Edinburgh and Pender says this is just the beginning of a period of “aggressive growth”.

There were three main catalysts which led to the sale of the business to Towergate. Pender says the first was that the firm had hit its two-year targets in just 18 months. Second, the underwriting contract with St Andrews meant a trade buyer could pick up both the distribution profits from Paymentshield and the insurance profits from underwriting the business. The third catalyst which prompted the sale was the appearance of the firm in the Sunday Times’s 100 fastest-growing businesses in the UK.

Pender says it was never a question of if HBOS would sell, but a question of when.

The sale is rumoured to have been in the region of £180m and, with HBOS thought to have bought the business for £36m, the bank increased its money fivefold in just two years.

Towergate has a history of buying general insurance businesses and merging them into the brand but Pender is keen to stress the Paymentshield brand will not be lost.

Paymentshield came under fire towards the end of last year for announcing that it would stop paying trail commission to brokers who are no longer regulated by the FSA. This was estimated to have affected 1,500 brokers who were retired or had left the industry.

Gareth Riding, son of Paymentshield joint founder Richard Riding, has set up an action group for disaffected Paymentshield brokers which aims to recover thousands of pounds in lost commission.

But Pender still maintains that the decision to stop trail commission payments to advisers who are no longer regulated to sell general insurance was the right one and says the firm has the FSA’s backing on this.

“Policyholders should be paying for getting the advice. They should not be subsidising agents who have left the industry. If these advisers had taken care of their clients and sold their business rather than leaving them as orphan clients, then we would still be paying commission to the adviser that could advise on that business.”

He refuses to comment on the action group and rivals such as Ceta who have used the trail move to promote their own propositions that do pay trail.

“I will be judged on how strong our proposition is and how we can strengthen that in the early part of this year and let the supporting advisers make their decision.”

The five-year plan is to grow aggressively through organic growth and acquisitions. Pender foresees further consolidation in the mortgage adviser arena and is interested in the opportunities that could arise.

Born: June 1965

Lives: Southport during the week and just outside Edinburgh with wife and three kids at the weekends

Education: 1978-82 Mearns Castle High School, Glasgow; 1982-86: Glasgow University, first class honours; 1993: Fellow of the Faculty of Actuaries

Career: 2004 to date: chief executive of Paymentshield; 2002-04: commercial director, Bankhall Investment Management; 2001-02: commercial & finance director, Prudential UK Intermediaries; 2000-01: head of product strategy & development, Prudential UK Intermediaries; 1999-2000: head of pensions, Prudential UK Intermediaries; 1997-99: corporate planning manager, Prudential UK Intermediaries; 1986-87: actuarial student, Scottish Amicable

Drives: Range Rover

Favourite film: Four Weddings and a Funeral

Favourite book: Taking on the World by Ellen McArthur

Favourite band: Texas or Deacon Blue

Heroes: Tiger Woods or anyone who is a strong leader and high achiever in business or sport

Life ambition: To be the best possible dad

Where do you want to be in ten years time? I still want to be in the financial services market and be a key member of the PMS TG team. I can see significant enjoyment over that ten year period. I am certainly not ready to go to the beach.

Hobbies: Three kids (two boys and a girl aged 10, seven and three) that I don’t see during the week, so weekends are family time. Sport, mad keen on golf and skiing

Likes: Family time at holiday house in St Andrews, team players, hard workers, people who are passionate about a cause

Dislikes: People with an agenda, people who are lazy, clever people who have got a need to demonstrate that they are clever

If I wasn’t in this job I would be… a property developer or a golfer.


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