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  • 07/10/2002
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What action could lenders take to prevent churning?

Steve Hoare, Homeloan Partnership

Lenders could stop offering better products to new, rather than existing customers. It would help if, on a remortgage, evidence was required that the existing lender would not offer a better rate. I know some lenders are looking at a sort of trail commission, or offering an enhanced procuration fee if the client remortgages back to the existing lender.’

Sally Laker, Mortgage Intelligence

We are piloting the first further advance product that pays a fee to brokers for Halifax. It has recognised there is no incentive for brokers to get involved if the client wants a further advance. Even if this sort of scheme keeps the borrower on the lender’s books for another year or so, it is better than nothing.’

Stephen Atkins, Mortgage Next

With the new regulation lenders will not have the same sort of access to brokers they enjoy now. With multi-ties and appointed representatives coming in ‘ as in the IFA market ‘ they will have to improve both their service and incentives to ensure brokers choose to stay with them.

Richard Hurst, Future Mortgages

In theory, if a broker is doing their job well then churning is inevitable because as a lender you can’t always be offering the best rate. Lenders can offer customers such a level of service that they do not want to move just for a marginally lower rate. Lenders must take responsibility.

Mel Fordham, Olympian Finance

The lender has an obligation to be concerned if they feel a client’s mortgage is being churned for the benefit of a broker or another party with no obvious benefit to the borrower. The only option open to the lender would be to ask a series of ‘filtering’ questions. But despite lenders’ concerns and any filtering they may employ, if the lender prohibited or hampered the client’s right to redeem their mortgage, they could be challenged legally.’

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