A year ago, Spear’s ran an interesting article about why so many HNWs, or even UHNWs (assets over £15 million) had such low credit scores and were often regarded as ‘risky’ borrowers by the mainstream banks. The article began with an amusing anecdote told by Alexander Hoare, chairman of his family bank, about how he had been refused a mobile phone when he walked into a shop. The reason was that his credit report came up blank.
The main reason for being shunned by the banks is that HNWs, especially the entrepreneurial and internationally mobile types, don’t tend to have PAYE slips to satisfy the new box-ticking, one-size-fits-all mentality that has been implemented by banks following the sub-prime mortgage scandal. ‘How much do you spend on groceries per month?’ will get most HNWs scratching their heads.
For HNWs — and property developers — who need money fast, there is a whole new ‘alternative financing’ universe, led by such dynamic characters as Hugh Wade-Jones at Enness Private, Mark Posniak at Dragonfly, and Paul Welch at LML. Like many in this niche sector, Wade-Jones began as a mortgage broker (for Foxtons), but he soon realised that the HNW sector was being poorly serviced. From offices in Mayfair, he has built up a strong alliance with private banks across Europe, many of whom are keen not to lose clients to whom they can’t extend loans (and often it is fast loans) themselves. Much better to refer to a broker like Enness than lose the client to another bank.
Wade-Jones says he loves his work because he can solve ‘life-changing’ problems for an HNW — or a PEP (politically exposed person) — with a few phone calls. It may be a bank in Monaco or Switzerland but it is all about ‘knowing your client’. The only problem he sometimes encounters are clients who are less than forthcoming about their finances. ‘I need to know about their wealth or their income,’ he says. ‘Either works. But I can’t work without their help. I often start by telling them, “I’m on your side.”’