Watford based secured loan broker, Loans.co.uk, one of the biggest employers in Watford, is to close to new business, taking with it some 276 jobs.
Last month the broker announced that it was struggling to ride out the Credit Crunch – explaining that the third party loans it relies on were in danger of drying up.
In a statement released yesterday the broker said it could no longer operate in this current environment and expected to complete its last customer loan early next year.
The statement read:
“A number of factors have led to this difficult decision. As a loan broker Loans.co.uk relies on third party providers to provide loans to its customers.
“A number of key partners have tightened lending criteria or are unable to accept new business. At the same time, house prices have been declining, making it more difficult for customers to fit within lenders’ (tighter) loan-to-value criteria.”
“Looking forward the company expects house prices will continue to decline and lenders will continue to be cautious. (Insuranceblogger agrees whole-heartedly, see our other credit crunch label posts.) The company cannot confidently project a recovery at Loans.co.uk in the foreseeable future and regretfully the decision has been made to run off the existing business. This will happen in an orderly fashion.”
The company confirmed that 276 positions would be lost. The broker has two other smaller offices in Preston in Lancs. and Fareham in Hampshire.
Recently Loans Directory - loans-uk.org.uk announced that the directory format of it's site (once one of the key loan reference points and authority sites) was no longer viable as a business format due to the number of loans available online being negligable.
The Competition Commission has today published for consultation its proposed remedies designed to increase competition in the Payment Protection Insurance (PPI) market.
In its provisional findings report published in June 2008, the CC concluded that distributors of PPI—such as banks, mortgage providers and credit card providers—face little or no competition when selling PPI to their credit customers.
The vast majority of the UK’s more than 13 million PPI policies are sold at the same time as a consumer takes out a loan or other type of credit and the CC found that many consumers are unaware that they can buy PPI from other independent providers.
Consumers rarely shop around to compare loan protection insurance prices and terms and conditions of PPI policies and rarely switch PPI providers. This ‘point-of-sale’ advantage makes it difficult for other PPI providers to reach credit providers’ customers and in the absence of such competitive pressure, PPI distributors are able to charge much higher prices than can be found at an independent supplier of loan payment protection.
Along with its provisional findings report, the Competition Commission published a Notice which outlined a number of possible remedies designed to increase competition in the market. Since then the Competition Commission has been collecting evidence regarding those possible remedies from PPI providers, consumer groups, the Financial Services Authority (FSA), the Office of Fair Trading (OFT), and other interested parties.
Following a series of hearings and a considerable amount of analysis, the Competition Commission is now proposing a package of measures which it considers will be practical and effective in increasing competition in the market to the benefit of customers.
The proposed package of remedies includes:
• A prohibition on the sale of PPI by a distributor to a customer within 14 days of the distributor selling credit to that customer. This will address the point-of-sale advantage, and give the customer more opportunity to compare products and providers, in turn encouraging greater competition between providers. Whilst the distributor cannot re-contact the customer for 14 days, customers will be able proactively to contact the distributor and purchase a PPI policy 24 hours after the credit sale.
• Credit providers will be required to provide a ‘personal PPI quote’, which will clearly state the cost of the PPI policy individually and when added to the credit product. If this is not given at the point of sale, the credit provider must do so if they subsequently contact the customer to offer PPI, and the prohibition period starts from the date on which the personal PPI quote is provided to the customer.
• A prohibition on the selling of single-premium PPI policies, which act as a barrier to customers switching and the costs of which are difficult to compare with other PPI policies. The CC considered whether mandating pro-rata rebates on single-premium policies would be a sufficient remedy, but has concerns about such a remedy which led it provisionally to conclude that it would not be sufficiently effective.
• A requirement on all PPI providers to provide certain information and messages in PPI advertisements (including the price of their PPI, expressed in a common format of monthly cost per £100 of monthly benefit required, and that PPI is optional and available from other providers).
• A requirement on distributors to advertise PLPPI (personal loan) and SMPPI (second-charge mortgage) alongside their respective credit advertisements so as to make it clear it is an optional product.
• A requirement on all PPI providers to provide certain information on PPI policies to the FSA and a recommendation to the FSA that it uses this information for its PPI price comparison tables.
• A requirement on all PPI providers to provide an annual statement for PPI customers, including information similar to that provided in the personal quote, to encourage customers to review their policy annually and make it easier for customers to decide whether to switch.
The proposed remedies have been published so that interested parties have a further opportunity to comment before the Competition Commission publishes its final report (currently planned for January 2009). This report will include the decision on the remedy measures to be introduced.
The Competition Commission last month published its separate provisional findings on retail PPI, a small part of the overall PPI market relating to protection taken out on repayments for shopping through home catalogues. The report concludes that, as with other types of PPI policy, retail PPI is highly profitable for distributors and there is little competition between providers on price and other factors, limited ability for customers to search for alternatives or switch products and a considerable point-of-sale advantage for the providers. Visit Personal Accident for more independent information on the cheapest loan payment protection insurance available
We're always on the look out for the wierd and wonderful insurance covers that are available on the Internet and today we feature Kite Surfing Accident Insurance from Personal Accident. As youtube returns 18,000 films for the search term 'Kite Surfing Accident' I guess that if you're going to Kite Surf you're definitely going to need insurance!!
Islamic Car Insurance FSA authorized Sharia compliant insurer
The FSA has authorized the UK's first independent takaful insurer, Principle Insurance which operates the website http://www.salaaminsurance.com.
Principle Insurance has become the UK's first Sharia compliant independent insurance company to be formally authorized by the FSA. The insurer will operate in accordance with Islamic laws, through which it will target the UK's estimated two million Muslims in the home and motor markets. In this way, the company is demonstrating a radically new approach to segmenting the insurance market by religion.
Insurance has always been a problem for Muslims and there are over two million Muslims in the UK and many of them remain unsure about the principles of Takaful. With the arrival of Salaam Halal insurance the UK Muslim population now has the option to buy insurance that is both low-cost and Halal.
Salaam Halal Insurance products are specially designed by leading insurance professionals under the guidance of a Shariah Supervisory Committee. This ensures all your insurance needs are covered, in line with your faith. The FSA has authorized Principle Insurance to operate as an insurance company in the UK. The company will trade in compliance with Sharia Islamic laws in regards to financial services, which prevent accruing interest and some forms of investment. As such, Principle Insurance will operate along the lines of typical cooperative mutual insurers already present in the market, however it is the first independent company set up to be fully compliant with Islamic law in the UK.
Takaful insurance is based on the concept of co-operation and mutual protection. Insurers who adhere to this approach see policyholders as contributors participating in a fund for mutual benefit. They are essentially the owners of the fund and the company simply manages it on their behalf, much the way a co-operative does. Instead of making a profit, the company will be paid a management fee, or Wakala. The business is further separated from mainstream insurers through its utilization of Sharia scholars who will supervise the activities of the takaful fund in order to ensure compliance.
New data from Royal Institution of Chartered Surveyors (RICS) has shown that house prices have fallen to a 30-year low over the last 3 month period and the number of surveys fell to the lowest since it began in 1978, with sales declining from 11.5 to 10.9.
RICS believe it is the lack of available mortgages which is overwhelming the market. However, they believe that sales would start to rise again now that more sellers are assenting to drop their asking price. And with the Bank of England slashing interest rates by 1.5% , bringing borrowing costs down to 3%, there have been some serious efforts to avoid a deep recession and hopefully these actions will help to enhance sales. However, Britain’s largest bank, the Nationwide, believe that house prices will continue to fall over the next few years. Here we agree with the latter, and despite the drop in interest rates, believe a recovery in the housing market is still a long way off, with the inevitable repossessions and falling house prices to beyond 30%, eventually fuelling a recovering economy in 2011, just one year prior to the London Olympics.
Nationwide - profits down but charts a steady course
The Nationwide, Britain’s biggest building society, has seen its half-yearly pre-tax profits fall by 18% to £322m, down from £394m for September last year.
Nationwide admitted it had been hit by a “challenging economic environment” which saw bad debts rise £12m from last year, as mortgage borrowers continue to struggle with mortgage repayments during the global recession. Mortgage Insurance protection can be found at Personal Accident
The lender’s book of bad debts now stand at £74m. The 2007 aquisition of the Portman Building Society and it's subsequent incorporation, is a major factor in the fall in profits. Its net share of the lending mortgage market has fallen 0.6% down to 5.6%, however the number in arrears stands at only 0.4%, compared to an industry average of 1.33%. These figures reflect the uncompetitive mortgages offered and the shrewd approach to the buy to let market in the past few years.
Nationwide remains confident that recent interest rate cuts will help minimise payment issues and reduce the impact to customers reaching the end of current deals. It also suggested that the fall in house prices would "improve affordability, which should bring about a recovery in the first time buyers' market".
Nationwide was one of the few lenders that immediately agreed to pass on the Bank of England's 1.5% interest rate cut to mortgage holders last week.
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