Brokers discovered the letters had gone out when loyal customers contacted them querying why they were being encouraged to take up a new product.
The letter, signed by Miguel Sard, managing director, mortgages, leads with two prominently placed statements, “Apply before 21 November 2016” and “Reduce your mortgage payments now, with no Early Repayment Charge”.
Michael Tickner, principal at KT Partnership, said: “My business is underpinned by loyal customers. I had three clients call me bemused as to why they were receiving this letter from Santander.”
The letter goes on to state that customers have a number of options; do nothing and move onto the bank’s Standard Variable Rate, choose another lender when the deal ends, or pick a new deal with Santander, guaranteeing lower monthly payments.
Customers are told that if they act before 21 November, they will not pay early repayment charges for exiting their existing deal.
Tickner said the letter was a ‘stab in the back’ from a lender he had been a staunch supporter of for many years.
He said the bank was attempting to steal clients which it would be otherwise unaware of, if they had not been introduced by the broker. He added: “Santander for Intermediaries? There is nothing ‘for intermediaries’ about this strategy.
Within the letter, a section headed ‘What do I need to do next’, emphasises the exclusivity of the offer and states it is only available through the bank’s mortgage advisers. The option to contact your Independent Financial Adviser, left out of this section, is placed at the bottom of the letter.
In the 12 months to October 2016, Tickner said KT Partnership, has written 588 mortgage cases valued at almost £152m. Of these, 139 cases worth just under £40m went to Santander.
“I’ve been a strong advocate of this lender. It has received around 25% of my business because it is quick to offer and has a slick service and we know its policies.” He added: “I will no longer be looking for reasons to place with Santander, I will never disadvantage my clients but I’m not looking for reasons to do business with them, as this stinks.”
Santander receives 75% of its mortgage business through the intermediary channel.
Brad Fordham (pictured), managing director at Santander for Intermediaries, said the reason behind the letters was to maintain its service levels during 2017 in anticipation of ‘peak demand’ and a larger than usual number of maturities. He said it was the first time Santander had done this, and it involved a relatively small number of customers. He described the strategy as ‘clear and transparent’ and in line with other lenders in the industry.
Concerned broker John Crabtree, owner and director of Crabtree Consulting, since learning of the letter started to contact his clients to discuss their options. He described the campaign as ‘totally unacceptable’ and has told his team of seven advisers not to use Santander unless there was an ‘absolute compelling reason to do so’.
Crabtree said he was concerned that the bank’s campaign would damage the high-level advice given by his firm, which may be in conjunction with the client’s accountant or financial adviser, by putting in place a specific mortgage strategy.
“For example, the client could be receiving a large cash sum in two years’ time and would be paying a lump sum off the mortgage balance,” he said. “If the client takes up the offer from Santander, six months earlier and locks in for another two years, it could unravel the advice and be detrimental to the client.”
He added: “Obviously the client should contact us before doing anything, but it may not always be the case when presented with an attractive new rate and a simplified process.”
Fordham said Santander recognised brokers would be contacting their clients to discuss whole-of-market advice and remortgage options. If brokers decided remaining with Santander was best for the customer, they can transact on their behalf using the online retention tool.
Crabtree said he has been told by Santander that if the broker were to arrange the rate switch six months early, ERCs would apply.
Adrian Anderson, director of Anderson Harris property finance specialists, described the strategy as ‘not broker-friendly’ and aggressive. “This is cutting out the broker completely. We can’t say to our clients let’s start the process now, because mortgage offers expire in three months.”
Fordham said the bank valued its relationship with the intermediary market and wanted to continue the positive work it had done for many years.
Santander would not promise to avoid running this campaign again in the future and would not comment on whether it had ended the campaign, although it is believed letters are no longer being sent.