The group behind broker SPF Private Clients has launched a lender specialising in buy-to-let, bridging and refurbishment called Lendco.
Ex-John Charcol and GMAC chief executive Simon Knight is managing director, with other recruits being ex-Shawbrook duo Stuart Kelly as head of credit risk and Graham Ingleson as senior underwriter.
Lendco has been handling business through SPF since May but is now set to widen its distribution.
Knight said: “We are aiming at the professional property investor.
“SPF has 21 years’ history of high net worth clients and Lendco is in a position to help those customers with a grown up underwriting approach.
“We are widening in due course by looking at a similar profile in terms of brokers and clients; but it’s not going to be a rush for distribution.”
Lendco lends in England and Wales and is based in London.
It will cater for complex situations like expats, foreign nationals, people with portfolio income to assess, top slicing and older applicants.
Lendco has so far dealt with loans typically in excess of £1m, but it will look at loans as small as £150,000.
SPF Group linked up with the investor Cabot Square Capital in February 2018, which already funds car finance provider JBR and capital loans and asset finance lender LDF.
Mark Harris, chief executive of SPF Private Clients and chairman of SPF Group, said: “This is something SPF has considered for a number of years, going back to pre-credit crunch, but a lack of capital precluded us from doing it.
“Cabot brings a great deal of expertise in terms of setting up lenders.
“And we are very fortunate to have been able to secure Simon [Knight], who ran GMAC at its peak with well over 1,000 staff in the UK, as well as Stuart [Kelly] and Graham [Ingleson].
“We are very excited as this is an opportunity; it is complimentary to what SPF Group does.”
However having a broker and lender in the same group raises questions about a potential conflict of interest. Indeed, this was a subject a number of mortgage professionals brought up.
Ray Boulger, senior technical manager at John Charcol, said: “It’s fairly unusual; there is a danger of conflict of interest so the broker needs to demonstrate it’s the best lender for the client.
“SPF must have identified a sector of the market where either it can’t place cases as easily or where there is scope to offer better deals to clients.
“On the basis that it will be careful to only recommend the lender when it’s the right lender for the client, it provides extra competition for the marketplace, which is good for clients.”
And Jaedon Green, director of product and distribution at Leeds Building Society, said: “Brokers have launched lenders in the past with mixed results.
“But as long as they are putting the correct mechanisms in place it’s good for the market.
“Bridging is an area that’s not well served by mainstream lenders, and the fact the housing market is turning slower is good for that area.”
Both directors responded to the issue.
Knight added: “Lendco has to compete on its own merits and absolutely that is the case.”
And Harris added: “The people we’ve spoken to about widening distribution have not raised that as an issue, certainly based on Simon’s pedigree.
“We will use Lendco when and if the offering is competitive and in the best interest of clients.
“Conflicts are fine; they just need to be managed.”
Lendco has separate payrolls, IT systems and compliance to SPF Private Clients, though both companies currently operate in the same London office.