With intermediary distribution wavering at at around 80% of mortgage business delivered to lenders, JLM argues a formal agreement must redirect consumers back to get advice first, avoiding lenders lenders contacting clients directly to cross sell other products and seek mortgage renewals.
JLM said that a “number of lenders” are increasingly trying to reduce adviser influence by contacting clients before their deals end – by up to six months in some cases – in order to offer incentives such as waiving early redemption charges and offering direct-only products through tick-box formats.
If the client wants to go direct to the lender or use the services of another intermediary, that is the within the client’s rights, JLM added.
“But clients are often completely unaware of what they are getting themselves into when ticking a box to change products, or opting to go ahead with a cross-sale,” says Sebastian Murphy, head of mortgage finance at JLM, “we would therefore like lenders to work with us, refer clients back to their adviser and ensure they have the right deals for their current needs and circumstances.”
“A formal agreement and commitment from a lender to do this,” added Murphy, “would go a long way to ensuring client protection and sends a clear message that advice is right, proper and necessary, and it is the original adviser who is best placed to deliver this.”
The details of the proposed formal agreement would involve directing clients back to the original adviser, and see lenders commit to providing client information and details to the adviser prior to product renewals.
Rory Joseph, director of JLM, said that the network, mortgage club and distributor community have a big role to play in persuading lenders into such an arrangement: “We believe that it is the distribution sector – particularly the larger network and mortgage club players – that are in the strongest position to drive the introduction of such a formal agreement forward. After all, the levels of business and the strength of their propositions could be particularly persuasive and should send a message to their own member firms that they are on their side, and committed to keeping business with them.”