Last week Tesco Bank stopped new mortgage lending and is exploring options to sell its existing mortgage portfolio.
So, this week Mortgage Solutions asked brokers whether lenders should agree to a code of conduct in how they will treat customers during a closure process, should it arise, and what its key requirements should be.
We would welcome a code of conduct, which would benefit both lenders and their customers. It would provide consistency to the industry and allow all clients to receive the same high-quality treatment – something which we pride ourselves on.
Lenders have to adhere to FCA rules and treat customers fairly, however, due to the saturated sector, some lenders haven’t survived in the last six months – this has affected the lending pipeline and left some customers in difficult situations.
We believe in treating customers fairly, and lenders should have a duty to do so too. This shouldn’t change if the lender leaves the market, and the code of conduct should include steps to protect customers in this event.
Everyone in the process is affected if a lender disappears, however, advisers can go some way to helping a client in a conundrum, if they are provided with information from the lender. Advisers will then be able to let the customer know if they should opt for a different lender. It doesn’t prepare us for a lender leaving the market, although the advantages of using an adviser means that they can quickly adapt an application and share it with an alternative provider from the preferred panel.
We welcome lenders visiting our head office and speaking to our franchisees and advisers. This enables everyone to keep up with trends and changes in the market, and build relationships with lenders which will allow advisers to provide the best service and insight to a customer.
I personally do not think lenders should need to agree to any extra code of conduct around leaving the market place nor how a pipeline is managed – it is not something we would like see become common with lenders and obviously keen to see lenders last the course.
The only time we have experienced poor service and issues is when mortgage offers have been retracted (which is very rare) and subsequently those lenders have either pulled out of the market for funding reasons or gone into administration – in these circumstances I think there needs to be protection to the clients which is expected from a binding mortgage offer.
In my opinion, Fleet Mortgages did this very well, their new funding line was in process of being agreed so they closed their doors temporarily and honoured the pipeline in which we had two or three offered cases and they completed with no issues. Once they were ready they came back to the market in a positive manner.
Lenders do already have a code of conduct around this point which is TCF – whether the lender is slowing down, stepping away or unfortunately found themselves in a tricky financial position they have a duty of care to clients which should be visible in all aspects of their business not just when a pipeline needs managing out.
Jonathan Burridge, development director at JLM Mortgage Services
We already have a customer outcome-focused regulatory regime at present and yet more layers of regulation, whether voluntary or legislative, are not really desirable.
Realistically it is not in lenders’ interest to make the customer journey any more sticky than it need be because as we have seen, in many instances, lenders are continually forced to address external pressures of funding or regulator pressure, be it from the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA).
Funding has been an issue and it is certainly a consideration that an adviser may bear in mind when looking at case placement but hopefully these issues are rare and actually the lenders affected have taken steps to honour what they could and compensate where they could not.
Sometimes the stickiness of the customer journey can be put down to the lender’s approach to underwriting and this can often be exaggerated by a ‘generalist’ adviser attempting to deal with a niche lender that they have had limited exposure to. Specialist knowledge in this part of the market is vital.
A ‘standardised approach’ might seem like a lovely concept in theory but by its very nature the niche/complex prime market is non-standard. In that sense a ‘standardised approach’ doesn’t really work and it may be a pipedream given the number of lenders and the very different ways in which they operate.