In a period of uncertainty, rumours are likely to do the rounds on a more regular basis.
Whether it’s a case of organisations laying off staff, reassessing their business models, pulling out of markets or being unable to continue trading, over recent weeks there has been a real peak in rumours – some that have been proven true; others false.
At a time when consumer confidence is at an all-time low with the national press continuing to scream about an imminent recession and suggesting drastic house price drops, it is no surprise that aspiring buyers are entering the market with extra trepidation, or even worse, deciding not to enter the market at all.
Confidence of organisations active in the market, from brokers to banks and building societies to the regulator itself, has also been hit and it is clear that there needs to be a period of calm and stability. But at this time, there is also the added risk of market abuse and profiting unfairly from others’ losses.
Indeed, only last week the Bank of England and the Financial Services Authority (FSA) admitted that it would be looking at the market following a whisper campaign that the HBOS group had experienced funding problems; a worrying move had it proved correct.
Sally Dewar, managing director, wholesale and institutional markets at the FSA, admitted that in the current conditions the regulator would be looking even harder at firms who sought to gain an unfair advantage by committing market abuse.
She said: “There has been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days, sometimes accompanied by short-selling. We will not tolerate market participants taking advantage of the current market conditions to commit abuse by spreading false rumours and dealing on the back of them.”
She added: “We remind market participants of the need to take extra care, in this market climate, to adhere to the market code of conduct.”
Don’t feed on others’ misfortune
While the new market provides ample opportunity to soak up business from ailing organisations, it remains key that firms take care not to feed too much out of others’ misfortune.
We are, of course, in a business world and one person’s loss is another’s gain. But with constant rumours and scaremongering, the industry is in danger of imploding and stalling any potential shoots of recovery.
Mortgage networks do, to an extent, provide a crutch and through their closer relationships with lenders are usually able to give greater market assurances.
With exclusive offerings, in-house underwriters and the ability to confirm a set amount of business through the network channel, it is unsurprising that mortgage intermediaries are looking for calm in the storm and heading for the network doors.
Consolidation looks likely to continue in the current climate and although not for everyone, networks can assist in placing cases as they are, in theory, able to provide greater guarantees and assurances over business levels and sustainability.
Talk will obviously continue as firms look over their shoulders and at their rivals, but in the words of the King, ‘a little less conversation’ and ‘a little more action’ could help set the market back onto the right path.
