Simon Stern of Prestige Finance

With funding provided by the UK based banks HBOS and Barclays, Prestige offer a unique Loan Management Service, which means their loan book is not sold on but is managed in-house by their own experienced collections team.

MYI: What makes Prestige Finance different from other current secured loan lenders?

Simon: In one word, "people." From the Directors down to the most junior of staff, it is the attitude of the staff that makes this company what it is. Obviously product and service come into it but without the staff and the way they are with our brokers and our borrowers, we could not have survived as long as we have, especially through this very difficult trading period.

MYI: Based on the events of the last 12 months Prestige Finance seems to be weathering the current climate very well. How do you see the next year going?

Simon: It has been a very difficult last 12 months for the company and without the support of our banks and private investors we may well have found the going even tougher. In regards to the next 12 months, we don't anticipate too much changing. We will continue to lend and hopefully will increase lending volumes over the year whilst at the same time concentrating, as we always have done, on collections and working closely with our borrowers to ensure they maintain their monthly repayments.

There will also be several regulatory changes over the coming 12 months and not only do we have to be prepared for these changes but also we will need to work with our brokers to ensure they are equally well prepared.

MYI: What new and innovative services do you offer to help brokers who are finding it difficult in the current economic climate?

Simon: I am not sure that we need to offer "new and innovative services to our brokers.” What we believe is more important is to provide consistency to our brokers, whilst delivering a clear message to them as to what it is we can do to support them.

During the past 2 years, despite the economic downturn, we have enhanced our website which has helped brokers considerably when underwriting and processing loan applications.

Obviously brokers want higher LTV's and reduced rates enabling more of their applicants to take up loans and we will continue to look at ways in which we can improve our lending criteria over the next 12 months.

MYI: As the UK's longest established secured loan lender, what are the major changes have you seen in the industry and what are your projections for the future?

Simon: This is a difficult question to answer as there have been so many changes in the 25 years I have been working in the industry. The biggest change of all is the acceptance of not only the Second Charge market as an important part of the mortgage industry but also the development and acceptance of the adverse credit market both in first and second mortgages.

Then there is the huge amount of regulation that has come into the market. When I started in 1984 we were still working with the old Money Lenders Act. Now we have not only the Consumer Credit Act, we have the FSA and especially TCF.

We also have directives coming from Europe and following the consultation paper issued last week by the FSA, it would appear that at some point in the future second mortgages could well be regulated by the FSA. However, should a new government come into power sometime next year, it could all change again.

In regards to the future, we will just have to wait and see. As I have already said the market has changed so much in such a relatively short space of time, what it needs most of all is stability.

We are all hoping that there will be new entrants to the market in the near future but I think any new lender will be cautious in terms of both criteria and volumes, especially whilst there is still considerable uncertainty surrounding both the property market and the risk of higher unemployment.

MYI: The government and the FSA seem to be calling for secured loans to be regulated. What effect do you think this may have on the industry?

Simon: Again, this is a difficult question to answer. However, it does seem to be widely accepted that secured loans (I prefer to call them either Second Mortgages or Second Charges) will at some point in the future be regulated by the FSA. Personally, I believe that the Consumer Credit Act (CCA) works perfectly well giving both the consumer and the lender the protection they require.

The argument put forward by the FSA that all types of mortgages should be covered by the same regulatory body, is in my view applying a simplistic approach to something that is a lot more complex than it appears. Therefore, I don't believe the FSA has yet done sufficient research into our industry allowing them to fully appreciate what it will involve should they take on Second Charges.

Then, as I have already said, a new Conservative Government (if they win the election) will probably change things again which will simply add more cost to both brokers and lenders, probably not benefit the consumer and just compound the problem.

MYI: Many brokers seem to be moving towards the unenforceable agreements products to help to generate extra income. Have you seen many enquiries at Prestige and has this affected your business?

Simon: Unfortunately, we have seen a rise in the number of complaints regarding "Unenforceable Agreements" and in some cases the complaints are coming from companies that were previously brokers.

I think it is appalling that brokers that so relied up