As the sector evolves, lenders are rapidly making changes to how the process works for advisers and their clients.
We asked this week’s Marketwatch panel for their views on the market and how it could work better.
The latest UK Finance data shows that product transfers are a substantial part of the market, representing a real opportunity for intermediaries.
Product transfers are also very much a positive part of the market. The accessibility of product transfer options is of real benefit to the client, and this is the key.
There are various reasons a product transfer may be a client’s most suitable option. Their circumstances may have changed since the time of application, for example – and it is only correct that lenders support existing clients by offering a competitive retention option.
Also, in this competitive rate environment, often the product itself may well be market leading or relatively close. In this scenario, for the client to not have to go through a full application and solicitor process is understandably attractive.
The increase in the number of lenders who have opened up their product transfer offerings to intermediaries has been very welcome.
It is great for intermediaries that the full spread of options for the client can be discussed and advised on.
However, evolution of this market is required.
Just over half of clients received advice on the reported product transfer applications for Q1 and Q2.
This means that close to half of clients did not receive advice. I find this to be quite scary, and hope the regulator agrees.
All clients deserve, and should receive, advice at the point of changing product.
Lenders could help in this space. A key part of the advice process is to review a client’s mortgage as a whole.
Clients regularly want to look to release equity, particularly for home improvements, as we see more clients extending rather than moving, change the term or change their repayment method.
And yet the majority of lenders do not allow these changes to be transacted for a product transfer.
A couple of lenders have taken steps here, such as some great recent moves by Skipton, and this should be encouraged.
For all the talk of technology in the industry driving improvements, if it could be used to upgrade systems to allow a full advice process on product transfers, this would benefit intermediaries, lenders and, most importantly, clients.
At last, most lenders have recognised the value of the intermediary professional by offering us the ability to product transfer, enabling us to continue a relationship, with what is essentially our client.
In the past, I have placed clients with certain lenders, knowing I probably wouldn’t get their business at the end of the fixed term, as the lender would already be ‘on it’ six months before promoting their retention deals.
Sadly, some clients saw this as less hassle and would not seek advice.
Some lenders need some recognition here, such as the likes of Halifax, BM Solutions and Barclays, which have offered this service for years.
Along with Accord and Virgin, the Lloyds’ brands are still some of the only lenders to pay the full proc fee.
And the process is improving. Santander and NatWest for example, have a fantastic online system, miles ahead of others – but not to ignore the elephant in the room, they are also among the lenders with some of the lowest proc fee product transfer rates in the industry.
With this market estimated being valued at a cool £200bn this year, my concern is, if it becomes the easy option, could this allow a new wave of inexperienced advisers to become lazy and unskilled?
The process for a product transfer and the advice given should not be any different to going elsewhere, and it’s good to see some lenders recognising this in the proc fees.
It’s important that advisers with integrity, continue to do what is right, not what is easy.
It’s great news that lenders are now offering the product transfer route to intermediaries.
This type of transaction can especially suit clients whose circumstances have changed since taking the mortgage and so no longer fit the mould of a normal mortgage criteria.
I’ve used this many times this year for clients whose incomes have dropped, but they can still afford the mortgage payments.
This is a good outcome for both the client and the adviser, as well as the lender.
Most product transfers systems are easy and fairly slick.
However I would like to see more lenders offering this as an extra facility to the intermediary market.
In terms of remuneration, lenders need to start paying a bit more for this service.
We as advisers, not only sit with our clients for a few hours sorting and analysing the best route forward, but we also carry the risk of the advice we give.
It would be nice for that to be rewarded and paid accordingly.