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Sun shines on flexi time

Sun Bank has hit the headlines by sending up a rallying cry to the Council of Mortgage Lenders asking it to take a look at so-called flexible mortgages.

The mortgage lender may be relatively small but it is shouting louder than most when it comes to setting standards for products. It claims to be taking IFAs seriously and is looking to do more business through them in the future.

In its bid to expand the business, it could soon be making news again as it prepares to go on the acquisition trail.

Sun Bank is busy calling on the CML for an investigation into the flexible mortgage market. It says many flexible loans fail to live up to their claims. It has called for the CML to scrutinise these loans and set up new industry standards.

It says there are six main standards which constitute what it views as a flexible mortgage, which include the ability to make overpayments and to take payment holidays.

It wants the CML to outline these standards and make them the minimum requirement for all flexible products.

Sun Bank has been in the mortgage market for the past 16 years. It offers a range of repayment, endowment and interest-only residential mortgages with variable, discount, capped and fixed-interest rates as well as flexible mortgages. It also offers a residential investment mortgage for the buy-to-let market.

Commercial mortgage finance is available for purchase, improvement or refinement of commercial, industrial and investment properties.

Sun Bank started off life as Confederation Bank but was acquired by Sun Life Financial of Canada in 1994, making it a member of the Sun Life Financial of Canada Group. The group is one of the biggest diversified financial services organisations in the world with total assets under management standing at £128bn at the end of 1999.

Sun Bank started in the UK mortgage market in 1984 and became authorised as a bank under the 1987 Banking Act.

The bank has £484m in customer deposits and 70,000 deposit and loan accounts.

In terms of its position in the marketplace, it sees itself as sitting close to building societies and small lenders.

Overall, the bank does nearly a third of all its business through IFAs. IFAs source about a fifth of its mortgages and about 40 per cent of its commercial lending. IFAs introduce about 44 per cent of business.

It says it is keen to continue working with IFAs and grow its business through this channel.

Lucas says: “We have a group of business development managers up and down the country aiming to increase the amount of business we do with IFAs.”

Aside from mortgages, the bank offers a range of Isa and Isa-only Tessa accounts to cater for lump sum and regular investments.

It sees itself as able to handle complicated mortgage cases quickly and says this gives it an edge.

But it is over the issue of flexible mortgages where the company is currently causing a stir. Following Sun Bank&#39s call for clarification in the marketplace, the CML has set up a working party to look at the products and it is supported by the Government in this research.

Sun Bank would like to see a stamp put on flexible mortgages to prove the product meets industry standards. This would act as a benchmark and it says this would be good news for IFAs.

It would lessen the risk of IFAs selling products which are labelled as flexible but which do not meet all the standards required.

Sun Bank marketing director Chris Cummings says: “Ideally, we would like to see an industry standard set for flexible mortgages and for the products to be marked. Marking the products would mean that IFAs could sell flexible mortgages with confidence.”

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