October 2016 Credit Management magazine

OPINION
STARTING FROM
SCRATCH?
It has been two years since a group of major lenders got together to push for consolidation
among financial services trade associations. Heather Greig-Smith reports.
FED up with the unwieldy number of
bodies and their associated fees, the
lenders argued that there was too much
duplication and a new voice was needed
in the industry with greater scope and weight.
A review team led by ex-Ofcom CEO Ed
Richards was formed to consult on the issue
and make recommendations. In November
last year it recommended a merger of five
trade bodies: the British Bankers’ Association
(BBA), Council of Mortgage Lenders
(CML), Payments UK (PUK), The UK Cards
Association (UKCA) and the Asset Based
Finance Association (ABFA). Four would come
together in phase one, joined later by ABFA.
It has been clear for some time that the
impetus was there for change – in January
HSBC and Barclays handed in their year-long
notice to the Council of Mortgage Lenders
even before members voted on the proposal.
In June the BBA was the final association
to vote to accept the merger, with 94 percent
of members in favour. Chief Executive
Anthony Browne said: “It is right that our
members get effective representation and
value for money from their trade associations.”
The original recommended timescale was
to launch on 1 November. However, the time
needed to secure executive and member
support has pushed this to summer 2017. At
the time of writing, Richards and the interim
team working on the ‘New Trade Association’
(New TA) were shortly expected to appoint
a Chairperson. A competitive process to
select a Chief Executive is also under way,
after which a new brand and identity will be
decided.
STAYING OUT
Not all are joining: the Building Societies
Association (BSA) and Finance and Leasing
Association (FLA) ruled themselves out early on.
The BSA said its 46 members were
‘unanimous’ in their desire to remain
independent. Writing to Richards, BSA Head
of Mortgage Policy Paul Broadhead said: “The
building society sector is truly distinct from
the banking sector, this includes corporate
structure, legislative status and in some
areas it is subject to additional layers of
regulatory guidance. We do recognise that
coordination between trade associations
could be improved…we would welcome the
opportunity to work closely with any new
entity in the future.”
Nationwide Building Society was in the
original lender working group. Executive
Director Chris Rhodes said: “A trade
association which provides a coherent,
customer-focused approach will be very
valuable to consumers, its members, and
policy-makers alike. Building on the
expertise of the bodies to be integrated,
the new association will be responsive to
a wide range of issues across financial
services.”
He added: “While building societies are
distinct to banks on many policy issues, and
as a result the Building Societies Association
are separate from this exercise, we will want
to see them working extremely closely with
the new organisation.”
Stephen Sklaroff, Director General of
the FLA, said its members also operate in
distinctive markets for which it provides
tailored representation. “The report of
the banks’ review of trade association
representation rightly recognised that the
FLA represents a diverse and specialised
membership, whose interests are different
from those of many of the other trade bodies
mentioned in the report,” he said, adding that
the FLA looks forward to working closely with
the New TA, “as we have on many issues
While building societies are distinct to banks on
many policy issues, and as a result the Building
Societies Association are separate from this exercise,
we will want to see them working extremely closely
with the new organisation.
with its predecessors, and with other industry
stakeholders”.
The implementation team said these
decisions are not problematic, as the
degree of overlap in membership and remit
is what has driven the included bodies to
merge. It expects there to be close working
relationships with a number of other trade
associations.
The Intermediary Mortgage Lenders
Association (IMLA) has also opted not to join
despite what the report said was a strong
case for doing so. Peter Williams, Executive
Director of the IMLA, said concerns of cost
and loss of voice for smaller members, meant
members value independence: “Feedback
from members is that they benefit individually
and collectively from having a dedicated
group for those who specialise in the
intermediary market, where lenders of all sizes
can exert an influence.”
However, the New TA has stated an
intention to include intermediaries in its
service remit from the start, with the IMLA
having the option to join later.
VOICE AND EXPERTISE
Two of the key concerns raised have been the
risk of a loss of voice for smaller members
of the existing associations and loss of
technical expertise. The New TA has therefore
been designed to mitigate this, with seven
proposed product and services boards to
sit below the main board. The main board
would take care of high-level strategy and
industry-wide issues, leaving the seven to be
the ‘principal policy-making bodies in their
respective areas’.
They seven boards are: personal,
mortgages, payments and cards, commercial,
wealth and asset management, investment
wholesale and asset-based finance. Members
of all sizes will be given the opportunity
to sit on the boards, each with around 15
members and terms of three years. In addition
there would be specialist committees for
small interest groups and priority strategy
committees for cross-cutting issues. Richards
called this a fresh approach to governance”
and said the voices of all members would be
heard.
18 October 2016 www.cicm.com
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