Brokers don’t understand retention policies, says Accord

Accord Mortgages has warmed up the debate over client retention policies and says brokers must understand the legal requirements for lenders.

The Woolwich came under fire last week for leaving clients unprotected if they took out a retention product before M-Day and later switched deals.

But Accord, which has the same policy, says this is an area many brokers don’t fully understand and to issue a Key Facts Illustration for a new product on a retention policy would be illegal.

Linda Will, managing director of Accord, says: “The law is clear on retention policies. When a transfer is made it is merely a variation and a KFI technically cannot be issued. The contract cannot be regulated because it is an unregulated mortgage. This is something many brokers don’t realise. A lender cannot suddenly turn a contract into a regulated one.”

Jonathan Cornell, technical director at Hamptons International Mortgages, first raised the issue of lenders’ retention policies.

He says: “It’s the system that’s wrong. It seems daft that it’s treated as an unregulated product.”

James Cotton, mortgage specialist at London & Country, adds: “This loophole has created inconsistency in the protection borrowers get, which goes against the principles of regulation.Closing it must be a priority.”