So, Mortgage Solutions asked this week’s Marketwatch panel how brokers are going to protect their client base?
Nicholas Morrey, product technical manager at John Charcol
At John Charcol we have two main methods we use to prepare for product transfers. Consultants will look to contact their clients six months prior to a product ending and we have an automatic email/text system to re-enforce the message a few times in the last few months. We also have a telephony team who try to make contact in that time as well to ascertain what a client’s plans are.
Product transfers will continue to grow but the sheer volume of five-year fixed rates that people have taken will cause brokers to source new leads more vigorously as most lenders do not pay a full procuration fee on product transfers.
This is despite an expectation that a full advice process be carried out. Santander’s method of not publishing their product transfer rates may grow in popularity among lenders keen to secure their level of retention.
But without robust systems to make an application process with ‘secret products’ easy they may struggle to implement it. I think the Financial Conduct Authority (FCA) may start to look more closely at this market as the product transfer figures are looking very large and they will be keen to see how much benefit consumers are actually receiving.
We expect the property market will behave much as it did last year once politicians manage to put whatever Brexit agreement they have spent two years devising into action. We are not expecting prices to collapse unless recession and redundancies re-appear – currently not looking to be the case.
Robert Winfield, managing director at Chartwell Funding
We used to diarise three months before the end of a fixed rate period to contact clients to conduct a review. When lenders started contacting our clients four months before the end date to deal directly we knew we had to change.
Contacting clients even earlier was pointless and so we got a CRM system that creates an annual review for every client. This helps us keep in touch with everyone we transact with and makes the relationship stronger. We get the opportunity to review protection and general insurance midterm.
Best of all we can forewarn clients that the lender will contact them directly offering their best deals, but reminding them that this is only one lender and we use over 60 and to stay in touch with us.
This has sent our retention rate through the roof and I am not surprised at Santander’s figure of 78% retention in their year-end figures as this almost mirrors ours. They have seriously improved their retention strategy and engaged with brokers a lot more to keep business.
However, some lenders are still way off when it comes to pricing to retain clients and think that offering full procuration fees is sufficient. There is too much competition for that to be a success and brokers will happily remortgage a client if it is best advice.
I am therefore expecting more lenders to improve their retention models and systems in 2019 and offer a better combination of rates and fees, while maintaining sufficient broker reward.
Lilla Dilliway, director and mortgage and protection adviser at BlueWing Financial
Lenders trying their best to retain customers is nothing new. We forget that just a few years ago the vast majority of lenders did not allow brokers to do a product transfer or even if they did, would not pay us a procuration fee.
Some lenders are still holding on to their old ways by only allowing a simple product transfer, if nothing changes, but as soon as the term or the mortgage amount changes, the client has to go direct.
Similarly, some lenders allow porting to be done by a broker, others do not. It is also a way of holding onto the client relationship when a broker may be better placed to sort out the mortgage.
So how can brokers compete for the business? Communication with the client is key here, as doing a product transfer directly is the path of least resistance for a client. It’s quick, it’s simple, it doesn’t require any documentation.
However, by brokers keeping in touch, such as via Christmas cards or the occasional “hello” email, explaining the options and making the client feel confident that they are getting the best deal could convince clients to continue using us even for a simple product transfer.