At any given time in our market, I think it’s always possible to sense a degree of tension between lenders and advisers. Not necessarily with those lenders who operate exclusively via the intermediary channel but perhaps with those who operate a number of different distribution strands.
Now, that doesn’t have to be a bad thing – after all, there’s no rules about the way in which lenders have to distribute their products. For instance, if you have a branch network and you believe that banks and building societies having a high-street presence is a good thing (which I do) – then of course you have to feed those branches with product.
Tensions and issues – however are always likely to arise because of that. For instance, offering different products direct/via the branch, compared to what advisers are able to advise on. It won’t need me to tell you about the dual-pricing arguments of yester-year, which I think for the main part have gone away. After all, how can you call yourself an intermediary champion if you’re policy is to offer better-priced products direct, for example?
Now, however, I sense those tensions are not so much around the ‘different products versus different channels’ argument, but instead tied up with notions of execution-only, and how lenders deal with existing borrowers who initially came to them via an adviser.
To what extent should lenders be targeting those borrowers with products months in advance of the end of their term? Should they be offering products which are not available to the intermediary? What level of information do they provide to the borrower about the advice process, its benefits, and indeed, the details of the original introducing broker? Can lenders safely say that, if the broker isn’t doing their job properly and securing that repeat business, it’s not their fault if the borrower chooses to come direct?
To my mind it’s a rather ‘grey area’, not least because lenders know full well that the protections the borrower would have received via the original adviser, will now be lost if they choose to go via an execution-only route. However, can we really force existing borrowers back to that original, or indeed any, adviser?
Lenders might, perhaps rightly, suggest that it’s a case of customer choice and they are merely facilitating the route which the borrower wants to go down. Advisers might, perhaps rightly, suggest this is disingenuous when lenders are putting so much resource and investment into technology which effectively removes the adviser from the process, and yet they’re not even willing to provide the name and contact details of the original adviser in a letter detailing that the borrower’s special rate is coming to an end.
There is an argument, I think, for both sides. Do I think some lenders could do more? Absolutely. Do I think it’s ultimately the adviser’s responsibility to maintain client contact throughout the mortgage term and thus (hopefully) secure that repeat business? Absolutely.
This is brought into even sharper focus when you understand that, as we speak, approximately £26bn of mortgage business is up for renewal coming to the end of a fixed rate. We’ll all be acutely aware of what this might mean for those borrowers who don’t remortgage, in terms of reverting to an SVR and paying more, so do advisers really have any excuses for not initiating contact and outlining all the options available to the borrower? Not forgetting of course, that when the lender contacts the client direct, they have no idea whether the borrower’s circumstances have changed, and whether those products offered direct are really right for them.
Indeed, only an adviser can make that call, and we all know that when you see an existing client it’s never just about a remortgage, when there could be other wants and needs that also need addressing. This isn’t just about the loss of income from a remortgage but the loss of a client who may need far more services and products from you than just that.
In a way, I would rather the borrower move to a new deal with the existing lender, than move onto the SVR. But, of course, it need never come to it, because – certainly from our perspective – we have a system (Revolution) which effectively works the adviser through the regular contact and remortgage process. For instance, the length of the scheme/end date is pulled from the sourcing system, automatically included in the case and the system informs the adviser of this via a notification which is clearly displayed on the adviser’s home screen. The notification provides all of the information from the client’s last mortgage case to enable the adviser to get back in contact and check the client’s new circumstances.
It’s also about giving the client the tools to view their own situation, to allow them to upload their own documents or track how their mortgage has progressed and see where potentially a new case is in the system. Keeping them involved via your operation means it’s not the lender they’ll go to when they need advice, but you, because they’ve been with you throughout. In that way, any lender/adviser tension is eased, simply because – when it comes to the borrower and client – you’ve put in all the work to ensure the adviser comes first.
Rob Clifford is chief executive of Stonebridge Group