Mortgage News
Clydesdale Bank begins retention fee pilot with five broker firms
Clydesdale Bank launched a retention fee pilot with five broker firms in February, including London & Country and John Charcol, as part of a new customer retention strategy.
If the pilot for existing clients is a success, it will be rolled out a spokesman told Mortgage Solutions, adding it was too soon to draw any conclusions.
Halifax and Woolwich, mrtgages from Barclays already pay brokers to handle product transfers for existing customers for roughly half the fee offered for a mortgage deal at around 20bps.
John Charcol’s senior technical manager Ray Boulger said it was too soon to report on progress but added: “We always need to consider whether a product transfer or remortgage is the best option for the client before we provide advice. There will be some situations where a product transfer is an option and a remortgage is not.”
He added: “But when you look at the time that needs to be spent with clients to talk over the options, having a broker do that will be very cost-effective. But the number of clients they keep will be dependent on many things, not least the competitive nature of their pricing.”
After the Mortgage Market Review (MMR) rules hit on 26 April, the ban on non-advised sales means lenders can only offer execution-only and advised sales to consumers, which could see lenders leaning more heavily on the advice community to tick compliance boxes.
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London & Country’s David Hollingworth said lenders have big challenges ahead over how they step up to advised sales.
“Some lenders will see this as a huge opportunity. Others will be more concerned about how they plan to deal with that in-house. The MMR has never happened before, so it’ll be interesting to see if other lenders look to use retention fees temporarily as they bed in their own plans or for the longer-term.”
Boulger added: “It’s much better from a lender’s point of view to be in with a shout of keeping this business.”
A spokesman from Halifax, which introduced proc fees for transfers in 2006, said: “The benefits for lenders who offer proc fees for product transfers are that they maintain the relationship with their customers, the customer gets the best product for their needs and brokers are rewarded for the advice that they have given.”