The lender is set to pilot a specialised legal loan product among aggregators in the coming months.
Plenti has begun to roll out a specialised offering, Legal Fee Loans, among brokers, having already signed off on distribution with two aggregators.
The line of credit-style product, which offers borrowers between $25,000 to $400,000, doesn’t require repayments until the end of the loan’s term and is assessed based on a client’s expected settlement instead of their income.
Plenti has targeted borrowers who don’t have an income and who wouldn’t be able to seek a traditional form of finance, reporting that their customers have included stay-at-home parents.
The lender liaises with the customers’ lawyers to assess their loan and if it is approved, Plenti is invoiced for the recurred legal fees and directly provides funding to the legal firm.
Until now, the product had been available via the direct channel or through a referral from accredited lawyers. Since it was launched in 2016, Plenti has accredited more than 310 law firms.
Nicki Olds, head of personal lending at Plenti told The Adviser that the five-year-old offering, which has been tried and tested, has reached a point where it’s matured and ready to bring to brokers.
“A lot of our brokers that we’ve partnered with, for the best part of five years, who were transacting on our consumer car loan or personal loan products, have expressed a lot of interest in the product recently,” Ms Olds said.
“For a mortgage broker who perhaps has written a home loan for a customer and that customer comes back, this is really a product that provides a solution for their clients and allows their client through this law matter and the broker is still there on the other side of that transaction to help with things like re-mortgages, etc.”
She added a survey of borrowers had found many would have had to otherwise borrow from friends or family, or to use savings, or liquidate investments or assets in order to pay for their legal advice.
The product is also expected to create opportunities for brokers, such as deepening client relationships and facilitate potential future revenue in situations such as a remortgage.
Brokers will be able to refer customers via the Plenti portal, where they can enter a name and phone number. Plenti will then be prompted to check in with the customer’s lawyer to obtain a case summary and to assess the loan application.
Ms Olds added the process has been refined for brokers to a “simple spot and refer model”, to keep the product and customers’ situation bespoke.
“We wanted to allow brokers access to the product without having to get too involved, so the broker has the peace of mind that their customer is being looked after through transitions and the broker can also focus on their core business, which might be asset finance or home loans,” she said.
Simon Bednar, Finsure general manager of aggregation, also weighed in, commenting: “For us it’s an opportunity to expand our toolbox of solutions to the Finsure broker network, providing access to additional products, customised to meet specific needs of any client situation.
“The addition of this product represents a unique growth opportunity for our brokers to expand on their current business offering.”
But for now, Plenti has chosen to implement a slow roll-out across the broker channel, wanting to keep refining the product for how brokers operate.
“For us, we want to pilot with a handful of aggregators to begin with, work with brokers to get feedback and test the market,” Ms Olds said.
The group does expect to have more uptake as it builds awareness and gains partners, but as Ms Olds explained, it’s different to other offerings.
“Since we launched with one particular group two weeks ago, we’ve had a handful of referrals come through, which is really exciting,” she reported.
“These types of transactions, the average time for one of these legal loans is in excess of eight or nine months. It’s very different to a traditional personal loan, where you submit and it would be approved and settled within a 24 or 48 hour period.
“The longer these matters get drawn out through court, the longer the loan continues.”
Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.
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