The role of the packager within the mortgage market is one that has been constantly up for debate. The onset of statutory mortgage regulation brought an advent of predictions that the packager sector was heading for the wall, and even as late as last year there were those still sounding the death-knell.
However, packagers have re-invented themselves, to the extent that many of them do not consider themselves as simply ‘packagers’ any more. ‘Distributor’ is the new handle, but the premise behind the idea is the same.
John Mawdsley, director at The Mortgage Partnership, says: “Packaging is the biggest misnomer in the market. It’s all about distribution and adding value to the chain and for the broker.”
The structure of the packaging market has also evolved so that the association has become a key component of the sector, with many placing their faith in them to eke out better products and services from lenders.
Taking a further step
Now this evolution looks set to take a further step with the launch of a packager forum, under the tutelage of the Association of Mortgage Intermediaries (AMI). While the first meeting of the group is still a few weeks away, the benefits that the packager community can draw from representation within a body that has already done so much to further the cause of brokers, is seen as a major plus point.
As Roger Morris, managing director of em-financial, comments: “There have been a lot of meetings involving the Financial Services Authority (FSA) which needed a packager voice. There are politics between the associations but Chris Cummings, director-general at AMI, has said that while we may be competitive businesses, we need to have a unified voice. AMI is so well respected within the industry and we support it and want to be part of the packaging initiative.”
The details of the packager forum are still to be decided, but Terry Pritchard, spokesperson for Freehold, believes that while some may be sceptical, this will be forgotten when the benefits become more obvious.
He says: “There is no representation of the packager market today. Cummings has done a good job in giving intermediaries a voice and while there are a few packagers out there who are a little suspicious as to what the aim is, when they learn of the benefits, they will get fully behind it.”
Unity is the word
So what will these benefits be? Much of the talk is around the idea of giving the sector a greater voice in how the market is structured, but the word on everybody’s lips is unity.
As Morris points out: “There is no need for individual associations to stop doing what they do, but it would be good to meet on a quarterly or monthly basis to talk about common issues and how we are going to improve the packager market.”
However, unity can be a fragile thing in the packager market, especially with the history that accompanies some of the relationships. The Alliance of Mortgage Packagers and Distributors (AMPD) was formed as part of a breakaway from the Professional Mortgage Packagers Association (PMPA), while Freehold was established to give a sense of enfranchisement to the smaller packager in a market that seemed to be favouring the larger players.
As Rachel Bancroft, managing director of KGB Packaging, explains, any attempt at a ‘super-alliance’, under the guidance of one figurehead, is fraught with difficulty.
“If the idea is that the AMI packager forum would take over from the other associations, this would be a mighty task, even for Cummings. He would have to be John Rice, managing director of the Regulatory Alliance of Mortgage Packagers, Jon O’Brien, operations director of PMPA, Matthew Arena, managing director at Exclusive Connections, and Eddie Smith, director of operations at AMPD, all rolled into one.”
Fundamentally different roots
According to research commissioned by The Mortgage Business, 19 per cent of packagers believe the associations should unite under one umbrella to form one ‘unified and powerful body’. Therefore, the opportunity of the AMI forum could provide a route towards this end.
But as many will argue, the AMI forum will not be that kind of organisation. As Bancroft comments: “Packager associations and organisations such as AMI and the Association of Finance Brokers (AFB) have fundamentally different roots. The PMPA, RAMP, and others, were formed as trade associations coming together to gain competitive advantage as co-operatives. AMI and the AFB, on the other hand, are membership organisations for individuals and firms and they address industry wide issues and provide useful information rather than act as a larger bargaining force for better products and fees from lenders.”
So while the AMI forum will not usurp the current association format, how will it affect the current structures in place? For Pritchard, representation for packagers will help to vanguard against potential regulation of the sector.
“With the inclusion of AMI to talk to the FSA on packager’s behalf, it means there is someone fighting for packagers and helping to get our points across. The FSA may be looking to regulate the packager market. I don’t think it understands the market but if you have someone there talking to it and helping it understand, those who don’t deserve to be regulated will escape.”
However, as Mawdsley admits: “There is clearly a willingness to work together and try to find ways of moving the packager market forward. However, the forum isn’t due until April and the first meeting is just to lay ground rules and highlight the issues for packagers. It’s a bit early to talk about where it’s going.”
