The firm admitted it would have to give around 50 people voluntary redundancy as a response to the difficult conditions which were now gripping the non-conforming sector.
Thomas Reeh, CEO of blackandwhite.co.uk, praised the attitude of the company’s staff to the news but insisted that lenders were forcing brokers into an impossible position as they squeezed commission payments to protect themselves.
“The reaction from our staff has been fantastic. They know what’s going on in the market but lenders are making it so hard. We had a record month in August for volume but our revenues were still down. Some lenders have reduced proc fees by 50 per cent and some have expanded their bandings so that medium adverse business is now paid at the same rate as light.
“The business levels are out there but lenders have really shown that shareholder returns are king. If they can’t make a profit, they just don’t want to know and while lenders have made huge profits over the last decade, they are not supporting brokers with the products when they need them.”
Steve Walker, managing director of Promise Finance, admitted he had seen commissions plummet across the secured loan sector in recent weeks.
“Commissions are much lower now. Some have dropped from 8 per cent to 3 per cent and you just can’t make money on 3 per cent. You can’t offer smaller loans as they just don’t work for us and if they can’t make loans work, firms will struggle to survive.”
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