UK Finance’s publication of the first raft of product transfer data has certainly caused a stir in the marketplace for a number of reasons. On a base level, the size of this part of the market was undoubtedly under-estimated by many, although it was incredibly positive to see that over half of the business written came with an advice element to it.
When you consider that lenders have historically taken the vast bulk of this business direct, then we can certainly say that great strides have been made, with most lenders paying proc fees for such business, and advisers clearly becoming more engaged with a significant part of the marketplace.
There is still work to be done here – the market norm for paying a smaller procuration fee should be addressed given that advisers are (for the most part) carrying out the same work as a remortgage, and as time goes by, I suspect there will be a growing number of intermediary-focused lenders who will be willing to address such an anomaly.
If there was any doubt that the market is heavily reliant on remortgage/product transfer activity, then this should have been well and truly dispelled recently. Purchasing continues to bump along the bottom – not helped by high levels of stamp duty, the cost of moving, and higher prices – but UK borrowers’ appetite to remortgage is not dimmed and advisers have a major role to play in this.
Recent research from Paragon shows how engaged the intermediary community is with those reaching the end of their current deals. In past times, mortgage advice was seen to be a purely one-off, transactional arrangement with little or no follow-up from the adviser. This is not the case at all now – Paragon’s Index suggested nine out of 10 advisers ‘keep a record of customer maturity dates’ meaning they can proactively contact them prior to this.
Half of the 200 advisers surveyed said they ‘always’ contact clients before the end of their current arrangement, while a third said they ‘usually do’. Given the importance of the remortgage/product transfer opportunity to advisers, you can’t help wonder why all those who responded are not making notes of redemption dates and ensuring they contact the client months in advance of this?
After all, it should be clear to everyone that lenders will not be holding back in terms of attempting to keep borrowers on their books, and if that means no involvement for the introducing adviser, then so be it. The strength of the product transfer data will tell advisers exactly what they’re fighting for, and what they’re up against in terms of the marketing and the systems lenders use to keep borrowers with them. Let’s just say, that the larger, residential lenders are not sparing any expense in terms of attempting to secure this business through direct means.
This is why having a quality CRM system can be worth its weight in gold for advisers because, coupled with strong marketing and communications, firms can programme their systems to make those regular contacts with existing clients and to ensure that their first port of call when it comes to securing a new deal is the adviser, not the lender. Our own system, Revolution, does exactly that (and then some) and we know that advisers value its ability to deliver in this area, and to ensure clients keep coming back to them, year after year, deal after deal.
We should be in no doubt that this area of the market will be a battleground for some time to come, and advisers should not be afraid to press home the advantages they have, and to ensure that clients are fully aware of what they are signing up for should they go through a tick-box exercise with their existing lender.
Protections will be lost, and the whole of the market will not be accessed, plus the chances of them getting the most suitable deal for them will diminish – do not be afraid to vigorously push these messages and to ensure that clients are aware of what they are giving up. Their best option – and yours – will be to return to you where you can deliver a full advice service. They’re unlikely to do this unprompted so utilise the technology available to keep them in the loop, and ensure you put your services in the shop window.
Jo Carrasco is business partnerships director at Stonebridge Group