FEARS RAISED OVER INTELLIGENT FINANCE FUTURE.

FEARS RAISED OVER INTELLIGENT FINANCE FUTURE.

MSP SEEKS REASSURANCES FROM UK GOVERNMENT.

SNP MSP for Livingston, Angela Constance, has today written to Gordon Brown and Alasdair Darling, seeking assurances over the future of Intelligent Finance in Livingston.

Ms Constance has reacted with outrage at reports that Lloyds Banking Group may further centralise operations leading to potential redundancies for employees at Intelligent Finance in West Lothian.

Under Lloyds ownership Intelligent Finance has already been forced to stop issuing new mortgages as business is centralised in other brands.

Ms Constance has also raised the issue with Scotland’s Enterprise Minister Jim Mather.

Commenting Ms Constance said:

“From scrapping the provision of new mortgages to the centralisation of services Lloyds ownership is raising real concerns over the future of Intelligent Finance.

“Competition law was changed to allow the merger with HBOS and Lloyds to take place and here we are seeing one of the most competitive 'offset' mortgage products being withdrawn from the UK market place to be replaced with more traditional higher cost products such as fixed rates. This is not good news for the consumer and staff.

"Despite being the first bank to break even in three years and having a huge asset in their Livingston base, the newly formed Lloyds Banking Group are still set on centralising jobs to their bases in Halifax and Gloucestershire, with a huge potential cost to employees in West Lothian.

“It is deeply disappointing the banking group is to downgrade IF to providing savings accounts only, whilst servicing existing mortgage customers.

“Lloyds has a reputation for slashing jobs and that was one of the reasons why I personally opposed the Lloyds takeover of HBOS.

"As major shareholders in Lloyds Banking Group it is incumbent on the UK Government to protect staff, and to protect their interests. There is a real opportunity for a buyer to grow the business and build on past success. Indeed there are other established companies who provide financial services who have an interest in offset products.

“I would like to offer my support to all employees at Intelligent Finance and offer them the assurances that I will personally fight for every job. Lloyds Banking Group needs to think again on these issues."

ENDS

1. The text of Ms Constance's letter is below;

Dear Chancellor,

I am writing to express my grave concern over plans announced by Lloyds to scale back operations of Intelligent Finance, the online banking division of HBOS. A Lloyds spokesman was reported as saying that I.F. will stop selling mortgages altogether from this summer and that “rationalisation is inevitable."

Intelligent Finance is a major employer in my constituency providing 1000 jobs and I have been contacted by a number of staff members who have concerns about their job security in light of these comments.

Intelligent Finance is a Scottish success story. In the first year, 250,000 accounts were opened and it was the first ever bank to break even in the first 3 years of trading. One year after launch some analysts valued Intelligent Finance at £700 million and it was seen by the Chief Executive James Crosby at the time as the jewel in the HBOS crown. Apparently he would boast that it would never be sold as it was too valuable an asset.

The Intelligent Finance concept was revolutionary with its end to end focus on customers and has won in excess of 30 awards for innovation and marketing. It pioneered offset mortgages and the associated technology and processes have been adopted by many banks not just within the UK but also throughout the world.

The Livingston site is a huge asset, the 200,000 square feet building is wholly bought and paid for. This state of the art site benefited from £10 million kit out which enabled the development of world leading systems and processes.

I am deeply concerned that the announcement to pare back operations to primarily savings accounts will result in the business no longer being viable. There are also concerns that HBOS in recent times have deliberately run down the range of products and have not valued the ethos and customer focus developed by Intelligent Finance.

It would appear to me that Lloyds are not only reducing the number of mortgage products in the market place but are manipulating the market by reducing access to products that have lower profit margins for the banking industry. They may well have their eye on the bottom line with a view to repaying their debt to Government and ultimately the taxpayer but it is wholly unacceptable for them to be sacrificing Scottish jobs, consumer choice and an innovative Scottish enterprise in doing so.

Intelligent Finance is the leading offset brand in the UK and through its offset capabilities, is currently providing thousand of mortgage holders with a much cheaper mortgage which is crucially important during this recession.

This announcement by Lloyds is not good news for customers, innovation in banking and the many staff that are at risk of losing their job.

Given that the UK Government is now a majority shareholder in the new Lloyds group, I am writing to ask you to use your best endeavours to prevent any redundancies in Intelligent Finance in Livingston and to encourage an alternative employer to be considered for what is a successful ongoing concern. There is a real opportunity for a buyer to grow the business and build on past success. Indeed there are other established companies who provide financial services who have an interest in offset products.

I am deeply alarmed about the further threat of redundancies in my constituency. Unemployment in West Lothian is above both the Scottish and UK average. I remember West Lothian in the early 1980s when male unemployment ran at 1 in 4; indeed, my father was one of those men and I am sure you will agree that we do not want to return to that state of affairs.

I stress again that Intelligent Finance is a Scottish success story that should be built upon and not sacrificed.

I look forward to hearing from you.

Angela Constance MSP