Capital One announced last week that it was to close its loan division which included HFS, the brokerage it acquired in 2005, while rumours continue to dog other firms about their trading future.
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Bob Sturges, director of communications at Money Partners, said: “There appears to be strong anecdotal evidence that some brokerages are suffering and it is down to market changes. The new entrants have put pressure on pay rates, while the significant drop in payment protection insurance sales has affected the incomes of both lenders and brokers. Also, some of the master brokers have invested heavily in sourcing technology and while this hasn’t come cheap, it has left some of the established retail brokers behind.”
Sturges believed that a shake-up of the secured loans sector was on the cards, which would see well organised and smoothly run companies come out on top.
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For Steve Walker, managing director at Promise Finance, many of the problems faced by brokerages could be traced back to the buyers who had undermined the original strengths of the business.
“I hear that some brokerages being purchased are not finding it as easy as they once were. If the brokerage had been run by a very hands-on individual, but is then taken over by a corporation, the cultures don’t fit well together.
“These companies are buying up brokers and they are getting established distribution as well as experience. However, they then change the distribution route so you have to ask why pay over the odds to acquire the brand and distribution?”
