While clearly in the strictest sense the borrower is both a customer of the intermediary and the lender, my view has always been that given the adviser makes the recommendation and introduces their client to the lender, theirs is the most compelling argument for ‘ownership’.
Although I’ve had plenty of discussions with lender representatives who believe otherwise, the vast majority of lenders we work with respect the need for advice, its delivery, the work involved, and the benefits of keeping that adviser relationship on a positive footing. For those that are intermediary-only lenders this is obviously an easier line to follow than those who operate in multiple distribution channels.
However, this doesn’t mean the debate isn’t worth having and it certainly seems to be on the radar of the FCA as it embarks on its review. Just recently, Deb Jones, director of competition at the FCA, said as much when highlighting that the regulator will be looking at lenders who compete for existing borrowers’ business and offer them direct-only deals, ostensibly sidelining the adviser.
As we know, this has considerable potential implications, not least the loss of protections afforded to them by opting to use a professional adviser. And of course, even with these direct-only deals being available, it does not necessarily mean it’s the best product for them against the whole of the market. In doing this, some lenders will point out that the borrower might wish to go back to their mortgage adviser, but there are also those who do not.
Tied up with this has been the recent debate around product transfers in general, and the payment of procuration fees for advisers who recommend their clients stay with their existing lender, albeit on a different product. It’s been a positive move by TSB, Coventry, NatWest and Santander, among others, to change their policies in that regard even if the decision from the latter has a little to do with the bad press it received toward the end of last year.
Overall, there might well be an interesting discussion to have around lenders’ responsibilities to those borrowers who have been served by intermediaries and customers’ likely expectations for advice in the future. Now, lenders themselves might say it’s not their business to make a judgement call on whether the client should be encouraged back in the direction of the original adviser. However, I tend to believe that the least that can be done is flag up that the advice was originally received and they might (once again) wish to review their options via an adviser.
The best course of action for advisers, perhaps in conjunction with a robust CRM system, is to do all they can to ensure their clients are aware of their advisory options, especially when their deal is coming to an end, and to also highlight the protections that will be lost by going direct. In this sense, it pays to keep those communication channels open all the time, so that when the lender does come calling, the client is in no doubt that they should be weighing up these product offers with what is available elsewhere in the market. Plus, of course, with circumstances likely to have changed, ensuring they come back to you means you can cover off all other wants and needs.
Competition is always going to be there, whatever the source; the important part is to have a strategy and process to deal with and combat it.