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Comment: ‘Product transfer’ is out of date

All the talk about the increase in product transfers is missing the point

SALLY LAKER, MANAGING DIRECTOR, MORTGAGE INTELLIGENCE HOLDINGS

At last, brokers have an easier remortgage route for customers if their existing lender has the most suitable product for them.

We all refer to this as a product transfer but, considering how much has changed in the process, does the term still stand?

The process requires a fully advised sale, which is the same as any remortgage, whether moving it away from the existing lender or not.

Historically, a problem arose if the lender did not allow the broker to access its system but insisted the client deal directly with it. This created a difficult situation: after providing the fully advised element, the broker would have to pass execution back to the client for them to do the application process themselves.

The whole point of a broker service is to make it easy for the client in arranging the remortgage. Handing it over halfway through was hardly client friendly; it also made it difficult for the broker to charge a fee for the advice and there was often no procuration fee either.

Regulation

Once regulation changed to ensure that product transfers also required the lender to give a fully advised sales process, providers realised the amount of time and training involved.

Gradually, brokers have been able to access transfer products through lender systems, and the big change this year has come from lenders beginning to pay a proc fee for doing so.

So, while the term ‘product transfer’ was fine when it was merely a switch of product at the end of a deal, in reality it is now a remortgage like any other, albeit with the existing lender.

Everyone is talking about the rise in product transfers but they are missing the point: these are still remortgages and require the same level of work from the broker, so they should be treated in the same way, including the amount of proc fee paid.

Sally Laker is managing director of Mortgage Intelligence

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  • Stuart Gregory 9th November 2017 at 3:45 pm

    Couldn’t agree more. If we all agree on this, then why is there very little pressure being applied to the lenders on this issue?

    You’ve got scenarios where some lenders pay full proc fee, others pay a little less than normal, and some where you only get paid for the ‘element’ switched if there’s more than one loan. Then there’s the lenders who don’t pay at all.

    Platitudes like ‘systems’ or ‘it’s less work our end’ are thrown out there – as if it justifies it. The fact is, it doesn’t.

    Don’t get me started on the lenders who don’t pay out proc fees until a month and a half after completion………