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Spooked markets, owning clients and surprising vulnerability – The British Specialist Lending Senate 2020

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  • 10/03/2020
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Spooked markets, owning clients and surprising vulnerability – The British Specialist Lending Senate 2020
Perhaps unsurprisingly the looming spectre of the Covid 19 virus was high up the list of discussion topics at The British Specialist Lending Senate 2020.

 

There was much debate about just how severely it would affect the lending markets and also what attendees should be doing in terms of keeping their businesses operational.

Capital markets and stock exchanges were already getting nervous prior to this week’s significant falls.

As one attendee noted: “The markets are spooked but will it be temporary or long term? As always, for lenders, diversification of funding is really important.”

 

Spotlight on lenders

This also prompted the realisation of difficulties currently being felt within the lending industry.

Several attendees warned there were likely to be further exits from the specialist market with it being crucial that lenders had a clear identity for what they were trying to achieve, and a profitable business.

“Lending volume is for vanity if you’re not making a profit,” noted one attendee.

And while it may be difficult for lenders already in place, new entrants were also likely to be in short supply.

“For anyone looking to launch a lender at the moment that’s madness – there’s plenty of funding but the capital is very expensive,” warned another.

There was however, plenty of positivity throughout the two days at the Brooklands Hotel in Surrey.

The industrialisation of big lenders means underserved and niche markets are appearing for specialists to delve into.

There has also been much discussion over recent weeks about the possibility of long-term fixed products launching, and it appears now is as good a time as any for that to happen.

 

Own client relationships

The threat to brokers from big banks has been high on the agenda recently with regulatory interventions looking to push customers away from advice, but advisers were urged to turn the tables on this situation.

Brokers should be owning the relationships that banks used to own – people no longer meet their local bank manager to get a mortgage, but there is still a desire for close communication.

It would take learning and flexibility, but brokers were told to have those intimate conversations with customers about their finances and help support them across all their financial needs.

Research presented by Pepper Money highlighted the importance of this, noting that while more people were looking towards brokers there was still plenty more for advisers to do.

And their advice and support could be particularly important in identifying problems, providing solutions and easing the anxiety that and other issues that goes along with it.

 

Who is really vulnerable?

Building strong, close-knit relations with customers could be particularly important with the extension of Open Banking which could lead to the disintermediation of the financial markets, as people are potentially given the power to control all their finances from one app.

“Brokers must think how they are going to work around that. The regulator is very supportive of it, it’s a major risk to the industry and in about five years will be prevalent,” said one attendee.

An interesting follow-up to that was posed by one attendee who asked if the classification of vulnerability needed to be reconsidered.

“Who is more vulnerable? An older experienced person who has been doing what they’ve been doing in the property market for years? Or a younger, inexperienced person, perhaps a first-time buyer with little knowledge of what to expect?” they said.

The event was capped off by the crowning of the inaugural British Specialist Lending Senate rock-paper-scissors champion.

And some inspirational words to move businesses forward as attendees were advised that making just one degree of change could be more successful than trying to overhaul an entire approach.

“Seek to improve what you are already good at, and try to make the connection between two things that were previously unconnected,” the Senate was told.

 

 

 

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