AToM is now calling on the industry to engage in a debate on how best these fruitful alliances may be brought about.
Vic Jannels, Chairman of AToM, said, "This does not, in my opinion, mean packagers merging, although that might happen. It is more a belief that suitable partnership opportunities probably do exist between companies not yet talking to each other. There have already been recent examples of this potential including Savills’ assimilation of PT Packaging and last week’s announcement of investment into Solent Mortgage Services by The Phoenix Group. It seems to me that these are reasonable examples of businesses coming together to enhance mutual trading opportunities as well as enjoying the benefit of sharing resources under the much vaunted heading, 'economies of scale'. And why not? If one partner can deliver a customer base and the other valuable in-house administration and product accessibility, then both can be winners! We have already seen Barnetts Solicitors predict the early return of specialist lending products to cater for those whose personal finances have suffered through no fault of their own – and packagers have an established place in the distribution of such products."
That said, AToM recognises that the day of the packager, in historic terms, is a thing of the past and that packagers must widen both offering and distribution opportunities if they hope to continue to attract lenders who will be willing to pay for the service they offer. AToM believes that, right now, lenders are playing 'hard ball' but that they are infinitely aware that when better times return the need for distribution will still be a major factor, although this is likely to be through fewer, more intense relationships.
Jannels is of the opinion that the latent power of distribution therefore remains key and that packagers will need to demonstrate to lenders that they have viable, close working relationships with large broker-to-consumer businesses in order to deliver the products and exclusivity which made them such a force in the past.
He says, " Most packagers have already scaled back staffing numbers and mothballed some activities in order to tough it out until the mortgage market frees up and lenders again require the benefits that packager distribution brings to them. AToM has done this and we have also diversified our offerings to widen our appeal. These include the provision of debt management advice (key in the current market) as well as increasing our presence in the commercial, secured and bridging arenas. This makes us as lean and fit as we can be, given current difficult trading conditions, and the AToM brand continues to remain strong. We are in a totally different marketplace from anything we have experienced before, however and, as the recent investor commitment above has shown, good mortgage packagers and distributors represent an excellent investment choice to potential and compatible partners to provide healthy returns once trading conditions improve.
“Inward investment in distributor firms will need to be undertaken on a medium to long term basis. It will not be a licence to begin printing money! There will need to be a mutual willingness to accept and share in both risk and reward over the next year or so. A combination of experience, expertise and a sound capital base is surely the best way of ultimately delivering good rewards to all stakeholders. Whilst we (AToM) have steered away from previous investment and acquisition overtures, the whole sector is currently experiencing unprecedented trading conditions. Now, no doubt along with other strong packager brands, AToM understands the need, and recognises the potential benefit, of talking to suitors who might provide a natural and mutual match for our forward looking ethos”
