Signalling plans to
keep searching for growth on as many fronts of its business as possible, GE Money Canada says it is seeking status as a trust company.
“It’s the next generation of our development and maturity as a business,” says Stephen Motta, president and CEO of the Mississauga, Ont.-based company.
GE Money, the consumer-lending unit of U.S. giant General Electric Co., has been working with the Office of the Superintendent of Financial Institutions to determine the best course of action, says Motta.
He says becoming regulated as a trust company would mean functions that are taken for granted in some of the areas in which it operates finally will be available to consumers.
For example, he says, as an unregulated financial entity, GE Money currently cannot clear cheques. This inability is crippling because a large part of its business is in credit cards. It has five MasterCard cards in its portfolio, along with private-label retail cards for Wal-Mart Canada Corp. and Hudson’s Bay Co. , among others.
As a trust company, it could issue products such as convenience cheques and balance-transfer cheques, which are standard fare for credit cards, he says.
In addition, a regulated status would allow GE Money to broaden its appeal on the home mortgage side of its business by offering home equity lines of credit to Canadians. Although Motta says the company is very interested in making the product available in Canada as an extension of its mortgage business, it is still early days.
The company, which has an established alternative-mortgage business in the U.S., entered what it calls the non-prime mortgage business in Canada last year. Its promise of speedy service to Canadians who traditionally have had trouble securing mortgages with the big banks, such as self-employed Canadians, new immigrants or those whose credit ratings don’t match their current income levels, has reached homebuyers in Ontario, Manitoba, British Columbia and Alberta. The business has a solid broker network behind it, says Motta, and will be Canada-wide by yearend.
Even in the U.S., where the company boasts a sizable mortgage business — it is one of the largest alternative-mortgage lenders under the WMC Mortgage brand — Motta says that home equity credit is fairly minor. He describes it as still in the “start-up” business phase.
Motta does not know how long the company will have to wait for a new regulated status. But, he says, GE Money is preparing to launch new products as soon as approval is received. IE
GE Money seeks change in status
President says becoming regulated as a trust company is key to its growth
- By: Wendy Cuthbert
- November 1, 2006 November 1, 2006
- 10:32