HSBC's actions forcing other banks to dual price
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The housing and mortgage markets alongside the wider economy appear to be stabilising, and although things remain tough, adjusting to the new world will continue to be painful over the next 12 months.
As intermediaries we need to keep helping customers make the right decisions and also make some tough decisions ourselves.
Getting the right proposition for customers, with the right structure within your own businesses, remains a key task before the end of the year.
One of the toughest issues facing intermediaries at the moment is the symptom of dual pricing. At AMI we have been talking to all the main lenders about this issue and telling them, plainly, how difficult this is making your lives.
However in the absence of any signs of change, I believe there are two major issues that need to be addressed.
The first is the lack of lenders in the market place and the second is the lack of funds available to those lenders that do remain. It is these two issues that are allowing dual pricing to continue.
Some lenders are being forced to price products more cheaply in their branches by the actions of HSBC who do not provide an intermediary offering.
This is not the choice of those in the banks who look after intermediaries, but they have large branch networks and significant numbers of staff they need to keep busy. They have tough branch targets, and are trying to fill their branch adviser diaries. They are able to meet their intermediary targets, in some cases, even pricing deals at a much higher level.
I am in continual contact with all the banks, as are those who head up the major intermediary firms and clubs. Our combined efforts with the senior management of these banks are having some impact, but to date has not delivered what we need.
In addition to this, I also have asked the FSA to address the issue. But they indicate that intermediaries only have to offer the deals that are available to them. We discuss regularly the difficult position this puts intermediaries in, but the FSA do not appear to be minded to do more than they have already done. I will continue to apply pressure in this area.
What we are also doing is talking to politicians, the Treasury and the Bank of England as well as the FSA about increasing the amount of mortgage funding available and trying to find ways of getting more lenders back to the market, such as Northern Rock.
At AMI we understand the difficulties you face daily. I do appreciate how hard it is to access funds, I do know that lenders service standards are awful at the moment. I talkto them about this each week.
It is our job to represent you in this difficult market and we are doing so. You need effective solutions that work for you and your customers. I will continue to try to change the world you currently have to operate in.
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Readers' comments (19)
Bill K | 27 Oct 2009 11:51 am
As much as I dislike dual pricing we as intermediaries have enjoyed exclusives for a long time as this gives us an edge over high st banks etc - I would prefer a level playing field where all pricing was the same - but this will never happen and it is the consumer who loses out and also loses confidence in the market.
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Anonymous | 27 Oct 2009 12:06 pm
"The FSA indicate that intermediaries only have to offer the deals that are available to them". So they are happy for the consumer to approach a "Whole of Market" adviser for a 90% mortgage to be advised best rates are 7% and above when they could achieve rates of 5.99% direct. Amazing that the FSA are happy with this!
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David A | 27 Oct 2009 12:09 pm
Dual pricing IS unfair to consumers who want independant advice and IS unfair to brokers.
If Bank branches are so expensive then surely using only brokers would be a more efficent strategy, paying proc fees per case rather than branch costs and staff salaries. The same adminisration centres and staff are used for both direct and introduced business.
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john Reid | 27 Oct 2009 12:10 pm
Oh Poor Banks !!! Thats a new excuse for Dual Pricing - its HSBC's fault?? Brokers gave the lenders 70% of their business for years - HSBC have never taken brokers business - whats different? I thought AMI was on the brokers side we are not paying them to make excuses for Lenders. What about when a lender declines our clients however when the same client goes direct to the same bank that has declined them through us the client magically passes credit score direct? Any excuses for that? No doubt thats someone elses fault too.
The banks got bailed out with our taxes however they have destroyed many peoples livelyhoods in this and many other industries and they continue to do so - wonder how much bonuses us brokers are going to get this christmas - we know a 70% bailed out bank will be getting £6 billion to share however they are expected to post an £8 billion loss - Is this a fit and proper business - FSA?
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Avenue & Co Private Finance | 27 Oct 2009 12:11 pm
The solution is very simple - offer brokers the same products as lender direct deals - that way the clients can choose who arranges the deal. I wish the AMI would realise this and push for it.
Right now wea are recommending on direct only deals and not getting paid for it and many client prefer to deal with advisers fo simplicity and convenience.
Every UK lender that is dual pricing is excluding a huge distribution force in terms of IFAs and brokers.
What I think is that lenders know that dealing direct allows them to assess clients more efficiently and avoid problems with brokers and of course build up their database.
Lenders have used brokers successfully in the past and they offer an immensely valuable service to the lender in terms of time and resources. Why doesnt AMI push this fact to them to offer a level field? Brokers surely, factually, shuould not be allowed to say they are indpependent and Whole of Market if they cannot access these deals.
We are making all of our clients aware of dual pricing - and then telling them that there is a fee payable for sourcing the best lender.
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Tim Robinson | 27 Oct 2009 12:14 pm
What we have to explain to our clients as intermediaries is that some of these direct offerings also come with strings attached. For example certain products are only available if you have a certain type of or are prepared to open a certain type of current account and which will cost the client a monthly administration fee.
My belief is that some of these direct only products are actually the sprat to catch the mackeral, the lender's really want your daily banking arrangements on which they can charge you an ongoing fee and if they have to initially reduce margins on the mortgage for the initial mortgage period so be it.
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john Reid | 27 Oct 2009 12:26 pm
Why do we have to tell clients about direct deals in order that we are giving clients best advice and treat them fairly - when are the banks going ot be told to tell their clients that if you go to a broker who scoures every bank for you then you will get better advice than getting a mortgage direct from the bank - treating customers fairly - surely thats fairer for the customer to get the best deal.
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Anonymous | 27 Oct 2009 12:31 pm
Actually HSBC do provide their products through intermediaries. If you want to provide your client an HSBC mortgage and be paid on it call me at Charcol.
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Anonymous | 27 Oct 2009 12:39 pm
Simple answer to all our problems would be lenders pricing to risk as they should have always and indemnity premiums returning. Is this such a bad idea or woods for the trees!Dual pricing All i can say is TCF!
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Carwyn Evans | 27 Oct 2009 12:45 pm
The only complaint I have about this comment is how do I get in touch with 'anonymous' regarding HSBC mortgages @ Charcoal - this would be great!
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