Barclays Ditch FirstPlus – Moneysupermarket Affected
Writes Dan Drage dan.drage@consumerchoices.co.uk
The ramifications of Barclays’ decision to close down loans provider FirstPlus have been felt by price comparison site Moneysupermarket.
With the mortgage market narrowing to an unmanageable state, Barclays (www.barclays.co.uk) has announced its intention to cease selling loans through the market leading FirstPlus imprint from August 9th 2008.
Additionally, the Barclayloan and Fair & Square subsidiaries will no longer allow new business.
The departure of FirstPlus from the secured loan market leaves just seven major providers, down from 18 this time last year. Demand for secured loans has tailed off dramatically since house prices began to decrease, and banks perceive this reduction in the value of the collateral being staked against the loan as too high a risk to take.
|
"Alterations to the PPI market, low consumer confidence and the ever present ‘R’ word have all combined to make life difficult for secured loans providers such as FirstPlus."
|
Left in the dust is price comparison site Moneysupermarket, for whom 80% of debt consolidation customers were generated by FirstPlus. Shares in Moneysupermarket dropped by a third on the FTSE 250 yesterday afternoon.
Simon Nixon, Moneysupermarket’s chief executive, admitted its secured loans department and spends on Google advertising would both be reviewed in a profits warning issued this morning.
Tim Moss, head of loans at Moneysupermarket, had the following to say about the current loans climate:
“First Plus's announcement that it will not accept any new business from 9 August is a huge blow to the debt consolidation market. The recent, and further predicted, falls in house prices make the environment for secured loans difficult for consumers and lenders alike.”
The Moneysupermarket group will take steps to mitigate the impact of First Plus's decision by sourcing additional capacity elsewhere, although the direct impact on 2008 revenues is anticipated to weigh in at £7million.
Chris Eagle, commercial manager at Credit Choices, echoes the sentiments of Tim Moss:
“Alterations to the PPI market, low consumer confidence and the ever present ‘R’ word have all combined to make life difficult for secured loans providers such as FirstPlus.”
| 
