Competition in Third Party Administration

12 March 2018

The amount of “invitation to tender” documentation received by organisations such as PSL indicates that many institutions are considering transformation programmes of varying complexities.

I first talked about this a year ago and so far in 2018 things haven’t slowed down. We still continue to see institutions considering the cost benefits driven by migrating to a new servicing solution. This can be as part of an internal re-platform, creating a third-party administration (TPA) deal with areas deemed low risk, or indeed, a combination of both.

The TPA market has been prevalent in the UK since the mid-1980s and has adapted in line with both market and economic requirements over that time. One of the first jobs I had was at Mortgage Systems in Fleet which was one of the largest outsourcers in Europe come the late 1980s but through the collapse of its owners eventually ended up in the hands of HML, giving HML a huge boost in terms of the size of assets under management back then.

The TPA marketplace has been a huge factor in assisting new lenders, funded through wholesale markets, to come to market and, very early on, became a reliable home for those lenders wishing to securitise. This continues to be the case today, with many new lenders outsourcing via what is now a far more competitive TPA market with many players able to advertise similar services. With the withdrawal of both the Term Funding Scheme and Funding for Lending Scheme this year, securitisation will be back on many lenders’ agendas and I expect TPA market to be very busy as a result.

For the first time in many years we are trading in a rising interest rate environment, with another rate rise expected possibly as early as May. The initial rise doesn’t appear to have a hugely significant effect on borrowers as yet but a couple more rate rises could well mean more significant arrears and collections activities for TPAs to deal with. This is especially the case when combined with increasing unsecured debt levels, as householders seem to be able to get hold of these far too easily at the moment.

Clearly those TPAs that have invested in automation of activities such as document generation, borrower self-service, multiple payment collections dates and flexible ways of paying will reap the benefits of their investment.

A lot of the success of TPAs this year will be proven by the amount they have invested in technology, but also by how thoroughly the technology has been tested to ensure it can cope with the requirements of a diversifying market. Those who have embraced upcoming change and facilitate it via automated technologies should be the winners this year.

Media contact

Debbie Staveley
Director and Owner,
bClear Communications

+44 (0)1275 542 511


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