An industry source told Mortgage Introducer they had spoken to a number of distributors who had been approached by the lender with offers to buy them out if they processed a high amount of edeus business after the first year.
The move would help to secure routes into the market for the lender at a time when a number of providers are trying to establish themselves.
The source said: “edeus is telling its big distributors if you back us for a year, we will offer to buy you. If they did this, it would secure distribution for them and provide them with a ready-made sales force. The new lenders need to be aggressive to secure their place in the market and there is no better way to secure distribution than to buy it.”
The practice of acquiring packagers by lenders is not a new phenomenon, with Morgan Stanley buying Advantage and Rooftop’s parent company, Bear Stearns, acquiring a stake in ISL before merging it with the lender’s operations.
Doug Hall, sales director at Mortgage Choice, believed any packager following this route would have to be careful.
“Packagers are very strong and can give lenders things they couldn’t have otherwise so I can see why a lender would consider it. But the packager would have to decide whether it was in its best interests.”
However, Alan Cleary, managing director at edeus, dismissed the claims as speculation.
“We haven’t offered anyone anything. As part of our business strategy, we might look at vertical integration but I can say this isn’t in our plans for the next 12 months and we have offered no indication to anyone that we would be doing this.”
