How did the acquisition by Key Retirement come about and how has it impacted the business?
Key Retirement wanted to enhance its range of financial solutions for later life borrowers looking to release equity from their homes as well as extend its product range for intermediaries. Given the strong reputation of V Loans within the intermediary sector as a leading second charge master broker, and KR Group’s hugely successful track record as a major financial services brand it was, in the end, an easy decision to make. V Loans has benefited from significant growth and investment as a result of the acquisition and we are very excited about the continuance of these growth plans as we move into 2016.
How have you prepared for March 2016?
We have worked closely with our highly experienced internal compliance team to ensure we will be fully prepared for the switchover to the mortgage regime and enable us to effectively implement the requirements of the Mortgage Credit Directive whilst working hard to minimise the disruption to our customers and valued intermediary partners. Having the opportunity to draw on our parent group’s regulatory experience has provided us with valuable insight into how best to adapt our business model, and to ensure we have robust systems and procedures in place to ensure we exceed the expectations of the regulator.
What are the biggest changes you’re expecting post regulation?
The changes to rules around affordability will certainly impact on loan acceptance rates, particularly as both the first and second mortgage will be subject to stress testing. We just need to ensure as an industry that a balance is maintained between a responsible approach to lending and ensuring those with the ability to pay are given the opportunity to achieve their financial goals. Whilst we would never underestimate the scale of changes brought about by the new regulatory framework, one of the more positive changes will be the ability to reduce fees charged to the end consumer to reflect their ability to positively elect to pay their own fees such as valuation costs, as opposed to rolling these up over the term of the loan and incurring additional interest charges as a result.
Do you expect mortgage brokers to embrace secured loans in order to maintain independent status?
For a firm to meet the requirements to be able to describe themselves as independent, they would need to be able to advise across a sufficiently broad range of both markets. With this in mind I think initially the majority of firms will operate as tied brokers, specialising either in the first or second charge market. We will be working closely with our network partners and V Loans brokers to ensure we can provide them with a tailored level of service to meet their preferred business model post MCD. There are huge opportunities for brokers to ensure they are delivering good customer outcomes by partnering with a specialist master broker firm, and we are keen to talk to brokers who are unsure what processes they can put in place to enable them to consider borrowers who would make significant savings by considering a second charge loan.
We know from speaking to our intermediary partners that they need more information about how they can build the right business model to enable them to include second charges within their proposition post MCD. In January, V Loans will be publishing a 3 point plan detailing how we can provide firms with different levels of service to match their requirements in terms of how they can offer second charge mortgages to their clients.
What is next for V Loans?
Our ambition is to be the first choice for mortgage networks, clubs and directly authorised intermediaries looking to place a second charge. We have built some very strong partnerships since founding V Loans and 2015 has seen our proposition strengthen even further with the forming of some major new partnerships such as LSL Financial Services. We are committed to working with our partners to ensure the opportunities from the alignment of regulation of the first and second charge markets are fully maximised and consumers ultimately end up with the most suitable product for their financial circumstances.