Loans is to shut down its direct-to-consumer arm Ice Financial Services.
Keith Dearling, director of Advantage, said the decision to ditch Ice, which was set up three years ago, was made because the consumer arm did not fit into its core business strategy.
Dearling said: “Ice conflicts with the core of our business so we are looking to shut it down. Our principle focus is on the intermediary market and looking after brokers who are in networks and servicing their needs.”
The move to close Ice has prompted questions about whether it is a viable option for packagers to run both direct-to-consumer and business-to-business operations.
Matthew Bright, managing director of Optoma, said: “I’m not surprised Advantage has taken this step. How can you run a business-to-business arm as well as a direct-to-consumer operation and not cause conflict?
“You’re getting business from your broker-base but you are then biting the hand that feeds you and going straight to the consumer as well. So you are literally in competition with your core business partners. It’s not a wise move.”
Stephen Atkins, group compliance director at Freedom Finance, agreed. “Many packagers are going to find that they will have to decide what their own niche is in the market and what they can and can’t do.
“It is not a good idea for smaller firms to have these conflicting business arms. The larger companies, such as lenders, can just about get away with it.”
But one packager who wishes to be unnamed told MI – News: “We’ve seen an increase in our direct-to-consumer business and there is definitely still a market for it alongside our business-to-business arm.
“Advantage’s direct-to-consumer operation concentrated mainly on second-charge loans and maybe this was tailing off a bit.”
